Stablecoins take a bite out of the volatile crypto pie

The bears cautiously tried to increase the pressure on Bitcoin by pushing its price to $9,300. Tug-of-war has already started at this level, as even this decrease was enough to activate equally careful purchases. If we exclude short-term fluctuations, the sideways price trend has been going on for a week. In case everything goes wrong, the bitcoin will get support at a 50-day average of $8,770. If things get even worse, the next most important support level is the 200 SMA at $8,340. So far, the main dynamics for the day were displayed on the stablecoins: USDT, USDC, BUSD. WhaleAlert reports a large number of coins being set in motion, which may be a harbinger of future large movements.

The advent of stablecoins has seriously reduced the volatility of the bitcoin, because in the past you had to find a direction for funds to close a position in bitcoin or altcoins, but now everyone transfers money to the stablecoins, waiting for the market to turn around. USDT from Tether and stablecoins generally showed impressive growth in 2020. According to Messari, the total issue of stable digital coins has exceeded $11 billion, having doubled since February.

As unpleasant as it may be for crypto enthusiasts, the near future of Bitcoin may depend heavily on the traditional market, which is highly overvalued and may be headed for a massive collapse. Bitcoin is categorized as a risk asset and will be sold without regret in such a case.

The data from the Chicago Mercantile Exchange (CME), which showed a tenfold increase in applications for bitcoin options over the month to June 10, is also evidence of high institutional activity. Even more impressive is the Deribit platform, where volumes have reached $1.1bn. Given the significantly smaller size of the crypto market compared to the traditional one, such values can signal an increase in the pressure of large capital, which could potentially increase volatility.

As for the miners, judging by the increasing difficulty of the algorithm, the participants of this market simply do not leave but manipulate the hash rate in order to achieve recalculation of the difficulty and increase coin output at these moments. On the one hand, we are witnessing a reluctance to leave the market. On the other hand, technical manipulations are unlikely to stretch the natural process for a long time after halving.

Separately, we should highlight the improvement in the prospects of Ethereum (ETH), which showed an increase in transactions to a 27-month high. This was made possible by running the Tether on the Ethereum blockchain and through decentralized financial applications (DeFi). According to CoinMetrics, the number of transactions with USDT on Ethereum blockchain has soared by 450% since the beginning of the year.