Some of the most recent reports on Cryptocurrency trading volume have concluded that most of the demand is coming from the U.S. & select global exchanges. However, this hasn’t lessened the concern of the U.S regulators about the Bitcoin price manipulation. Previewing the data about the funds being moved on-chain for the biggest stable coin, Tether, presents a totally difficult picture for China – a country mired in controversy over its complete ban of Cryptos. More on this later, but first a look at the continued rise of stable coin projects over the past year & a half. Today’s data has been provided by Autonomous NEXT Analysis, Chainalysis & Coin API.
With the core premise around the utility of stable coins being a reliable mechanism for payments in order to speed up the process of crypto adoption, they easily get drowned in the hype created by the large price movements in Bitcoin & the Alt.coins as we have seen in the past couple of months. While 2018 was one of the worst bear markets for the mainstream cryptos, Stable coins continued to gain traction, adoption & acceptability as they were backed by fiat currencies in the majority of the cases thus providing a stable payment mechanism.
Looking at the charts above, it can be seen that the stable coin projects almost doubled from the period between Jan. 2018 – Oct. 2018 before dropping suddenly in Dec. 2018 corresponding to the most recent lows in Crypto prices. However, ever since that drop, stable coin projects have seen another spike of almost 50% totaling well over 250 projects. Interestingly enough, despite that slump last winter, the money raised by these projects has continued to rise at an exponential pace topping well over $4 billion currently. Another notable factor from the first chart signifies the complete dominance of Tether (USDT) in the Stable coin space occupying more than 70% of the market cap.
Talking about Tether being the market leader in the Stable coin space brings us to our next set of charts. According to data from Chainalysis (chart above), the Chinese demand for Tether has exploded – where the on-chain transaction value of Tether received by the Chinese exchanges has increased 5 times from a mere 12% in Q4 17′ to a whopping 62% in the second quarter of 2019 so far. Most of the gains in transactional value seen by Chinese exchanges have come to a corresponding loss to the U.S exchanges, which have seen a dramatic decrease of share from 39% to a paltry 2%. Global share of Tether on-chain transactions has also seen a significant drop from 48% to 36%.
The chart above shows the relationship between the On-Chain Tethers received by the Crypto exchanges and the reported volume by these exchanges. A couple of trends here as well – reported trading volume has risen in conjunction with the on-chain transactional volume most notably in 2019 marking an increased trading activity with the rebound in Cryptos. The May reading is beginning to see an excess of reported volume over the on-chain transactions confirming a spike in buying interest.
And the final two charts show the massive amounts of funds being moved into exchanges in China possibly for the purpose of trading. These charts confirm two trends as well – first being the sharp increase in interest seen from the Tethers received by U.S & Chinese exchanges in the past two months. The more notable is the fact that daily volume from a single trade on a Chinese exchange equals $215 million for the month of April, which is three times as much as Coinbase & the Tether received by Chinese exchanges dwarfs the amount received by U.S exchanges, when comparing their values.
Non-financial companies are already beginning to enter the stable coin market with their own products – Global Coin by Facebook, which intends to issue its own native coin to use for international remittances & across its ecosystem of Messenger, Whatsapp and Instagram applications, while Samsung Coin by its parent company intends to convert your mobile phone to become your crypto wallet. At the same time, new & ingenious stable coin projects moving beyond the basic utility of price stability are continuing to emerge which offer decentralization, fungibility & a chance to earn a passive income all at the same time. One such ambitious project is Xank, which is worth checking out.