Stablecoin supply alone won’t pump Bitcoin markets — Ki Young Ju

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As a seasoned crypto investor with a knack for deciphering market trends and patterns, I find Ki Young Ju’s analysis both insightful and worrying at the same time. The current Bitcoin-to-Stablecoin Exchange Reserve Ratio, while indicating potential for growth, also highlights the imbalance in supply that could potentially stall the price surge.

Currently, Bitcoin (BTC) is holding steady near the $70,000 mark, causing discussions among investors and experts about what factors might propel markets upward. Ki Young Ju, CEO of CryptoQuant, has offered an insight: despite the increasing supply of stablecoins, this influx alone isn’t substantial enough to generate substantial buying liquidity and boost Bitcoin prices significantly.

In simpler terms, the creator of CryptoQuant shared the Bitcoin-to-Stablecoin Exchange Reservoir Ratio – a tool for comparing Bitcoin reserves on trading platforms with stablecoin reserves. This ratio suggests that there are roughly six times more Bitcoins stored on these exchanges than there are stablecoins.

As per Ju’s findings, the value held in stablecoin reserves amounted to around $30 billion in September 2021. At present, the total market capitalization of all stablecoins is approximately $166 billion. Interestingly, just 21% of these stablecoins are kept on exchanges for trading, which is significantly lower compared to 2021 when over half of the total supply of stablecoins was stored on exchanges.

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In the present market cycle, the CEO of CryptoQuant contends that although the supply of stablecoins is expanding, these digital assets are predominantly utilized for functions other than trading.

Stablecoin supply alone won't pump Bitcoin markets — Ki Young Ju

Stablecoins as a store of value

Ki Young Ju observed a rising trend in which stablecoins are increasingly utilized as a means for storing value or facilitating remittances. As reported by Chainalysis, it’s estimated that more than half of the total remittances sent to countries like Venezuela, Argentina, Brazil, Columbia, and Mexico during 2022-2023 were conducted using stablecoins as a method for value storage.

This trend holds across all jurisdictions with high inflation, including Turkey — which Chainalysis identified as the population with the largest share of stablecoin purchases when measured against gross domestic product (GDP).

ETF flows and Coinbase USD liquidity will be crucial

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In simple terms, Ju believes that the availability of liquidity from digital asset ETFs and USD liquidity from Coinbase will play a vital role in supporting market stability during the following months.

WonderFi CEO Dean Skurka recently made similar remarks and noted that strong ETF inflows signified solid and sustainable institutional interest in Bitcoin. 

As an analyst, I posit that robust institutional interest, combined with macroeconomic elements within the U.S. and Canada, will serve as significant drivers propelling the value of our scarce, decentralized asset upward.

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2024-11-03 06:28