As of late, the crypto market has observed increased stablecoin transactions. This shows the general adoption of cryptocurrencies by the broader population and the recognition of market risks. Investors and traders mainly turn to the most profitable altcoins that can generate the maximum returns in the short run. They also turn to Bitcoin as a major long-term investment.
Experts say that during periods of recessions and price corrections when the fiat value of crypto assets drops, crypto investors shift to stablecoins as it has a fixed fiat or gold value. By doing so, they are able to accumulate additional assets that can be actively used when the market is subject to change.
Santiment, a blockchain analytics company, in its latest data report states that the amount of large stablecoin transactions have recently increased. This suggests that many whales prefer to shift some portion of their assets to less volatile coins. Major demand has been observed in stablecoins UST, USDC, BUSD, DAI, and TUSD. Analysts say the data shows that crypto investors shift their preference toward stablecoins that use innovative algorithms. The innovative algorithms ensure the stability of their exchange rate or those backed by various crypto assets such as Bitcoin and Ethereum. The shift also shows the growing crypto market independence from traditional fiat markets.
Analysts believe that some investors’ taking to stablecoins reflects the changed conditions in the market and reduced returns associated with investments in cryptocurrencies. It also highlights the growing concerns about the future dynamics of the crypto market and Bitcoin. It should be noted that whales traditionally have access to the latest analytical technologies. They believe that such a rapid price decline indicates some fundamental problems which may hurdle the restoration of the crypto market to its historically maximum levels.