Crypto Market Net Inflows Skyrocket as Investors Pile in Funds Through Stablecoins
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The bearish straits surrounding the crypto market seem to be coming to an end, according to a report by Glassnode. Now, funds are flowing into the crypto space through fiat-backed stablecoins.
90-Day Net Change Turns Positive
Stablecoins have long served as a means for investors to acquire blockchain-based assets, such as Bitcoin. Pegged to a country’s fiat currency, stablecoins have become a key part of the crypto ecosystem.
This strong prevalence has seen it become a key metric in ascertaining both bullish and bearish net inflows into the nascent industry. To capture this, popular analytics firm Glassnode analyzed the 90-day net change across the crypto landscape.
In its report, Glassnode noted that the 90-day net change surrounding the top four fiat-backed stablecoins has significantly pushed upwards. The captured stablecoins include Tether’s USDT, Circle’s USDC, MakerDAO’s Dai, and Binance’s BUSD assets.
Corroborating this positive change, Reflexivity Research stated the aggregated stablecoin supplies have flipped positive for the first time in 1.5 years since the bear market began in 2022. In addition, the blockchain-powered analytics service stated that this depicts increased liquidity on-chain and is a sign of capital net inflows into the burgeoning industry.
The crypto market has weathered some of the harshest winters in recent memory as it shed off more than 70% of its $3 trillion valuation during its zenith. Following a series of market-wide implosions and broader macroeconomic events, the emerging industry slumped to $900 billion at one point, with Bitcoin leading the charge downwards.
Currently, Bitcoin is making a strong recovery, having pushed about $30,000 two weeks ago, and is now trading at $35,000 plus.
Bitcoin Spot ETF Frenzy Catching Like Wildfire
The markings of a market downtrend officially began in May 2022 following Terra blockchain’s collapse. Given that its algorithmic stablecoin, UST, could not retain its 1:1 peg with the greenback, there was a massive backlash with several blockchain protocols, and investors found it hard to retrieve their funds, leading to a sort of run-on-the-bank in the decentralized ecosystem.
However, more events were in the offing. The popular FTX exchange also announced its bankruptcy, and its founder is facing criminal charges around fraud. This further led to a drawing away of liquidity when the market was looking to recuperate.
Now, tides are rapidly changing following growing interests from several legacy financial and technology companies. One such company is BlackRock, which controls more than $10 trillion in assets under management (AUM).
Speaking on Bitcoin, one-time crypto critic and CEO of BlackRock Larry Fink stated that the massive turnaround the asset manager has experienced has been largely due to the inherent quality of the decentralized asset.
Why is bitcoin outperforming bonds?!
Bonds historically have been considered a safe haven asset, but it appears bitcoin is starting to steal the spotlight.
This comes days after BlackRock CEO Larry Fink said allocating to bitcoin was “a flight to quality.”
Capital flows drive… pic.twitter.com/vjLWpHAjnM
— Pomp 🌪 (@APompliano) October 25, 2023
Given this, BlackRock has joined a plethora of asset management firms like Grayscale, Ark Invest, WisdomTree, Fidelity, and several others to file for a spot Bitcoin exchange-traded fund (ETF).
While the US Securities and Exchange Commission (SEC) has been reluctant to approve it due to perceived market manipulation, BlackRock is seemingly becoming confident that a Bitcoin spot ETF approval is on the way.
Making this claim is Fox Business’ Charles Gasparino, who stated that BlackRock could see its Bitcoin spot ETF filing approved in early January 2024.
— Charles Gasparino (@CGasparino) November 9, 2023
Grayscale’s CEO, Micahel Sonnenshein, is also pointing to a potential Bitcoin spot ETF approval on the horizon. Posting on X (formerly Twitter), Sonnenshein tweeted that the ten-year rehearsal for a regulatory greenlight is nearly over and that the crypto-facing asset manager is ready for the main event.
it's been a ten year dress rehearsal. we're ready for the main event.
— Sonnenshein (@Sonnenshein) November 13, 2023
While this might seem vague, it generally points to Grayscale’s triumph in the court to see its Grayscale Bitcoin Trust (GBTC) converted to a spot Bitcoin ETF.