Bitcoin Price Below $9K, Stablecoins Supply Hits $10B as Investors Prefer Dollars over BTC

UTC by Wanguba Muriuki · 3 min read
Bitcoin Price Below $9K, Stablecoins Supply Hits $10B as Investors Prefer Dollars over BTC
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The value of stablecoins assets surpassed the $10 billion barrier gaining at least 70% in the last two months as investors prefer dollar-backed assets over Bitcoin.

Stablecoins keep attracting more and more investors. On May 12, the value of stablecoins assets broke the $10 billion barrier. The value has gained by at least 70% in the past two months, according to Coin Metrics data. This significant stablecoin supply growth arises from more crypto investors deciding to trade altcoins using dollar-backed digital stablecoins instead of Bitcoin.

As expected, most of this growth comes from Tether (USDT) that represents about 90% of the entire stablecoin market supply. The biggest USDT markets by traded volume are supported by Huobi and Binance. Both of these Asia-based exchanges support almost 200 different cryptocurrencies making them highly favorable to the altcoin traders.

Nearly all exchanges offer the option to trade assets that are priced in different quote currencies mostly bitcoins or dollars. That determines the value of these alternative cryptocurrencies.

Historically, most of the altcoin investors prefer to transact in bitcoin or ether as the currency that prices all the other tokens. However, in the last two years, the trend has shifted considerably. Currently, they mostly trade against stablecoins.

The increase in trading stablecoin quote pairs comes simultaneously with significant general growth in total altcoin trading volume according to Nomics data. However, that growth does not include the Bitcoin and Ether quote pairs. These pairs have majorly remained below their volume highs that were made in late 2017.

Reasons for Rising Demand in Stablecoins and Falling Interest in Bitcoin

One analyst said that the stability of the dollar-backed tokens seems to be the main advantage over using BTC as the quote currency. A crypto markets analyst at Brave New Coin Aditya Das commented:

“Stablecoins have always had an edge over bitcoin as a base trading pair because of its inherent price stability. Stability means traders feel safer holding a stock of it and using it as a liquidity tool for trading.”

Notably, the demand for stablecoin quote pairs in the crypto spot markets has also impacted derivatives products. For instance, BitMEX is carefully looking at the shift in demand aiming to come up with additional stablecoin-denominated trading products. BitMEX is the second-biggest crypto derivatives market by open interest.

The head of business development at BitMEX, Greg Dwyer, said that the exchange has noticed a new trend. He said that traders prefer to trade USD-like denominated pairs. That is the case since altcoin trading dominance moved from XBT-based Poloniex to USD- and USDT-based Binance and Coinbase.

BitMEX unveiled two new futures products earlier in 2020: ETHUSD quanto futures and XRPUSD perpetual futures. The CEO of Binance.US, Catherine Coley, agreed with the upwards trend in appetite for stablecoin-quoted pairs. She said that before and during the 2017 market rally, ‘you had the bitcoin OGs trading in bitcoin-quoted pairs.’

Nevertheless, the newer generation of investors and traders believe in dollars and they also prefer trading with stablecoins.

Bitcoin Price Analysis

The projected price volatility in the Bitcoin markets dropped sharply after the halving. Currently, BTC price is hovering around $8,900 with the first strong support located at $8,609. Any break below that level opens the doors for the $8,440 support zone and below it is $8,085.

Looking above, the nearest resistance has formed at $9,140. If the bulls break above that level, $9,500 is the next target for them. But, the bulls need to break above $10K for the next bull run to be declared. Analysts and commentators believe that Bitcoin will eventually rise. Thus, a break past the $10,000 resistance zone may support an upside trend in the near and middle-term.

Altcoin News, Bitcoin News, Cryptocurrency news, News
Wanguba Muriuki
Author: Wanguba Muriuki

Wanguba Muriuki is a content crafter passionate about putting everything into writing. He is passionate about Blockchain and Traveling. He is also an experienced creative and technical writer. Everything and everyone has a story to tell. What better way to capture the real story than in words.

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