Stablecoin Supply Grows at the Fastest Rate Since June, 6.55 Billion Added in First 10 Days of November

Stablecoin supply is back on the rise after staying mostly flat for some time.

In the first five months of the year, as the crypto market rallied, the supply of stablecoins increased significantly. The supply of USD and crypto pegged crypto started in 2021 at about 29 billion and ended May at 104.4 billion, representing a surge of 260%.

By the end of Q3, stablecoin supply was at 126 bln after starting the quarter in July at 108 bln.

The supply jumped by just over 3 billion in October, to start November at 129.69 billion. On Nov. 10, it was at 136.24 bln, already increased by about 6.55 billion in a matter of just ten days.

Stablecoin supplies are up 5% this month, and growing at the fastest rate since June, despite calls for more regulation of these digital dollars.

— Galaxy Digital Research (@glxyresearch) November 12, 2021

This has been in line with the Bitcoin price rally, which only started pumping in quarter four after the consolidation in quarter three.

While October’s rally was propelled by the first Bitcoin futures ETF starting trading, on Friday, the rejection of VanEck’s spot Bitcoin exchange-traded fund (ETF) had BTC sliding.

After hitting a new all-time high at $69,000 on Thursday, trading as an inflation hedge for the first time on Friday, Bitcoin went down to $62,300. As of writing, BTC is trading around $63,500.

Amidst this price action, bitcoin’s realized volatility is slowly drifting back towards a one-year low.

In tandem with Bitcoin, altcoins also fell, and the total market cap has yet to recover above $3 trillion.

Transitory high cpi inflation = bullish

Permanent high cpi inflation = bearish (af)

The devil is in the details

— Alex Krüger (@krugermacro) November 12, 2021

In the macro market, the US dollar headed for its best week in about five months as traders and investors bet Federal Reserve hiking interest rates earlier than expected due to the US inflation rising the fastest in three decades.

The dollar index hit a fresh 16-month high above 95.2, gaining the most since June 20.

“We close out the week with the USD thoroughly breaking out,” Chris Weston, head of research at brokerage Pepperstone, wrote in a client note. “I am seeing signs of an impending mean reversion play in the USD, but in this flow, dips are a buying opportunity.”

Earlier this week, data showed that consumer prices last month rose at the fastest annual pace since 1990, questioning Fed’s stance on inflation being “transitory.” Now, markets are pricing the first rate increase by July.

In reaction to this, stocks had their biggest fall in over a month, but S&P 500, Nasdaq, and Dow Jones all went up Friday and are near their all-time highs.

Meanwhile, gold managed to rise to its five-month highs as investors sought inflation hedges—trading at $1,864 per ounce, up from $1,760 last week.

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