• Bitcoin price hitting $27,000 has caused markets to turn bullish, which has flipped investors' sentiment.
  • Accumulation seems to be a trend as stablecoin whales start increasing their gunpowder in case of a drop.
  • Tether and True USD have become a popular among investors due to the turmoil in the stablecoin ecosystem.

The collapse in United States banks in 2023 put a massive strain on the risk-on markets like cryptos and stocks. This caused a momentary spike in selling pressure due to panic, which caused the markets to tank. Judging by the current state, recovery crypto markets seem to be going well as compared to stocks and the credit for this goes to the stablecoin ecosystem.

Also Read: Silicon Valley Bank and Signature Bank hearing to be held on March 29, FDIC Chairman set to witness

Banking mayhem and crypto stablecoins

As recapped in a previously published article, the crisis began with the US Securities and Exchange Commission (SEC) going after stablecoin issuer Paxos. The simultaneous collapse of US banks caused markets to tumble. But a few things are inherently different in crypto markets, i.e., the stablecoin ecosystem. 

The $134 billion ecosystem is situated not just in the US but across the globe, making the short-term collapse in the US banking system localized to only a few stablecoin issuers. Tether, the largest stablecoin issuer by market capitalization, and a few others like True USD (TUSD) showed no depeg, while others like USD Coin (USDC), Dai (DAI), Frax (FRAX) etc., saw the coins move away from their $1 peg.

On-chain analysis reveals that the comeback seems to be fueled by two major stablecoins - USDT and TUSD. Tether added $2 billion worth of tokens last week, which was minted but not issued. 

Read More: Tether minted $2 billion worth of stablecoins last week

Likewise, Binance, one of the largest crypto exchanges in the world by trading volume, converted $1 billion of its SAFU Funds into TUSD AND USDT, signaling that these stablecoins are, at the moment, safe.

Read More: Binance removes BUSD from its $1 billion SAFU Fund, swaps it with USDT and TUSD

Stablecoin whales fueled the March rally

The Supply Distribution chart for USDT and TUSD shows a similar trend, accumulation from whales holding between 100,000 and 10,000,000 coins. 

The number of Tether whales holding 100k and 10 million USDT saw a massive spike, denoting that more investors are converting their stablecoins to USDT. 

More specifically, USDT whales with addresses holding between 100k and 1 million saw a spike from 13% to 15% between March 9 and March 18. The addresses holding between 1 million and 10 million USDT increased from 20% to 22%. 

All of the signal points to the fact that these whales are ready with gunpowder to accumulate cryptos and trigger a run-up. 

For TUSD, whales holding between 100k and 1 million tokens increased from 44 million to 50 million. 

Supply Distribution chart

Supply Distribution chart

While the outlook of the entire market has flipped bullish after Bitcoin price tagged $27,000, investors are still cautious due to the troubling macroeconomic conditions. The bullish outlook is still uncertain, especially if the banking crisis gets worse. 

If the policy changes from the Federal Reserve gets hawkish, it could trigger a rally for the US Dollar, putting pressure on the risk-on assets and driving them to the ground.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Why Bitcoin remains sideways despite record BTC ETF inflows

Why Bitcoin remains sideways despite record BTC ETF inflows

Bitcoin's relative range-bound movement in the past few months, despite record net inflows of $12 billion across spot Bitcoin ETFs, has sparked worry among investors. Many analysts predicted a highly bullish outlook for Bitcoin when the ETFs launched.

More Bitcoin News

UwU Lend offers bounty reward to uncover its exploiter

UwU Lend offers bounty reward to uncover its exploiter

In a Thursday broadcast, UwU Lend consents to a $5 million bounty reward in ETH to whoever discovers the identity of the hacker(s) who breached their protocol. The DeFi protocol has reportedly suffered another breach, which cost $3.72 million.

More Cryptocurrencies News

AAVE price tumbles 20% in 2024 despite doubling its total value locked

AAVE price tumbles 20% in 2024 despite doubling its total value locked

AAVE, a decentralized crypto lending platform, has noted a massive spike in the total value of assets locked (TVL). Rising TVL is considered indicative of higher relevance among market participants and trust in the platform. 

More Aave News

SEC Chair says Ethereum ETF S-1 approvals likely to come over the summer

SEC Chair says Ethereum ETF S-1 approvals likely to come over the summer

Ethereum was down nearly 5% on Thursday as SEC Chair Gary Gensler suggested spot ETH ETFs will likely receive approval over the course of the summer. The update was accompanied by mixed sentiment from derivatives traders.

More Ethereum News

Bitcoin: Is BTC ready for a new all-time high?

Bitcoin: Is BTC ready for a new all-time high?

Bitcoin whales have increased buying activity to the highest level in two months. Investors show no signs of FOMO despite BTC’s recent tussle with the  $70,000 mark. US spot Bitcoin ETFs experienced a notable uptick in activity, reflecting growing market interest.

Read full analysis