As the cryptocurrency market rebounded from its most recent crash, reports claim that stablecoin inflows and exchange reserves have decreased dramatically. However, the stablecoin in Whale Wallet has also dropped to its all-time lows.
According to research by Glassnode, USDC, the world’s second largest stablecoin, has experienced a sharp drop in exchange deposits. Exchange deposits (7d MA) for USDC declined to 138.25, a 17-month low. On March 23, 2021, a low of 138.81 was recorded in the last 17 months.
Another update from Glassnode showed that the percentage of USDC’s supply held by the top 1% of wallet addresses fell to a 22-month low of 87.66%. On August 20, 2022, a 22-month low of 87.66% was recorded.
USDC exchange inflow (7D MA) volume also declined to an 11-month low. The value has dropped to $11.13 million. However, an 11-month low of $11.28 million was recorded on February 16, 2022. Experts claim that the exchange’s reserves and inflows for USDT, USDC, BUSD and DAI are declining. They mean there is less purchasing power in the market now.
What does this mean for the market?
The most noticeable decline was in USDC. The stablecoin’s growth outperformed that of the already-established USDT in the first half of 2022. When the price of Bitcoin (BTC) dropped to a 25k–28k range in May, its reserve on Spot Exchange reached a high of $1.9 billion. Later, as BTC’s price fell to the 19K level, the figures increased to $1.3 billion in June. But as of right now, it is 268 million.
This raises the possibility that whales and major institutions will sell their USDC holdings to buy more BTC when prices are low. It added that the exchange reserves for the remaining stablecoins have not shown any significant increase over the past eight months.
At the beginning of 2022, USDC had a market share of 25.8%, compared to 47.5% for USDT. USDT and USDC currently hold 43.8% and 36.3% of the market share. The USD coin is slowly gaining ground as Terra collapsed in May while Tether saw de-pegging.
