According to blockchain analysis firm Glassnode, the crypto market saw net capital inflows for the first time in 17 months.
After a Long Time, Money Inflow to the Cryptocurrency Market Increased
The 90-day net change in the supply of the four largest stablecoins (Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and Dai (DAI)) turned positive, indicating capital inflows into the market.
This is the first since the collapse of Terra in mid-May 2022. Stablecoins have been widely used to finance cryptocurrency purchases since 2020.
The increase in stablecoin supply represents the potential purchasing power that investors can use to purchase cryptocurrencies or use them as margin in derivatives trading.
“This week, the 90-day change in total stablecoin supply turned positive for the first time in 1.5 years,” Reflexivity Research wrote in an email to subscribers on Nov. 14. “This indicates increased on-chain liquidity expressed through stablecoins and is a sign of capital inflows.” detectable,” he said.
The reversal comes as Bitcoin (BTC) has more than doubled this year to over $35,000, with most of the gains coming on expectations that U.S. regulators will soon approve an exchange-traded fund that invests in the cryptocurrency.
The indicator had turned negative in the first half of May 2022, when smart contract blockchain Terra's LUNA token, which aims to stabilize the blockchain's algorithmic stablecoin UST, fell from $80 to a few cents, destroying billions of investor wealth.
Liquidity continued to leave the market in the following months as the bankruptcy of multiple funds, crypto lenders, and the FTX exchange diminished investor confidence.
*This is not investment advice.