As the positive market sentiment evolves, a new wave of optimism is emerging with the resurgence of stablecoin supply seen on-chain. This isn't just a temporary uptick - we're witnessing the most significant inflows into crypto markets in over a year, signalling a potential turning point. The 90-day percentage change in stablecoin supplies is nearing a 5% positive shift, indicating a much-anticipated return of on-chain liquidity, especially on Ethereum.
October marked a significant rebound in on-chain stablecoin volumes on Ethereum, reaching approximately $390 billion—the highest since the USDC depegging event in March. This rebound is not just a statistical anomaly but a sign of a broader recovery in the stablecoin inflows and market excitement!
Figure 1 - USDC & USDT stablecoin inflows continue to grow at a steady passe.
As we approach the launch of the Bitcoin ETF, it's crucial to assess the market's state. Those who intended to sell have likely already done so. Stablecoins, after bottoming out three months ago, are now experiencing significant inflows for the first time in two years, suggesting the beginning of a market reversal. This change in the supply-demand equilibrium, coupled with the upcoming Bitcoin and Ethereum ETFs, could lead to more inflows, setting off a positive feedback loop as major assets see an uptick in value.
The current market dynamics suggest a shifting sentiment from fear to opportunity. In financial markets, perceptions of risk often evolve into pursuits of gain. The length of this opportunistic phase is uncertain, but its potential is more clear than ever!
Total Crypto Market Cap: $1.520T (+12.51%)
DeFi TVL: $51.89B (+18.85%)
Stablecoins: $128.59B (+3.58%)
On November 18, 2023, approximately $9 million from the dYdX v3 insurance fund were utilised to cover losses incurred during liquidations in the YFI market - approximately 40% of the fund's total value. Despite this, dYdX assured that no user funds were compromised and stated that they are conducting an investigation into the matter. The CEO of dYdX described the situation as a deliberate attack targeted at the exchange. dYdX announced that, despite the incident, its insurance fund remains robust, holding $13.5 million. The exchange clarified on its website that the insurance fund, intended to cover negative balances in accounts, is under the direct management of the dYdX team regarding deposits and withdrawals.