The bear market in 2022 has been quite challenging for both cryptocurrencies and crypto companies. The chain of bankruptcy that started with Terra-LUNA in May of 2022 continued with the bankruptcy of FTX in November.
After a challenging 2022, cryptocurrencies made a good start to 2023 and recorded significant increases.
While 2023 is expected to be a good year for the crypto sector, US regulators increased the pressure on the crypto sector and targeted important platforms such as Binance.
Commenting on the US regulatory pressure on crypto, JP Morgan analysts said that this pressure is shrinking the stablecoin universe, Coindesk reported.
Stating that a sustainable recovery and rise in Bitcoin (BTC) and crypto prices is unlikely as the stablecoin market continues to shrink, analysts argued that the shrinkage in the stablecoin market should stop for permanent rises in crypto.
JP Morgan analysts led by Nikolaos Panigirtzoglou made the following statements in their report:
“The effects from US regulatory pressure on the cryptocurrency industry, the effects of the banking crisis on the crypto ecosystem, and the repercussions of last year's FTX collapse are putting pressure on the stablecoin universe, which continues to shrink.
Because although cryptocurrencies, especially Bitcoin, have made a positive start to 2023, the total market capitalization of the crypto industry fell from $1.26 trillion on April 13 to $1,089 trillion last month. This is the result of oppression."
Stating that Tether (USDT) dominance and market share continues to increase despite shrinking and pressure in the stablecoin market, analysts said that regulatory pressure in the US continues to hurt USD Coin (USDC), which is losing market share.
Analysts also added that Tether dominance has increased further with the SEC's pressure on Binance's stablecoin, Binance USD (BUSD).
Finally, analysts pointed out that the share of US Treasury bills in stablecoin reserves has increased.
*Not investment advice.
