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The price of stablecoins was relatively stable during the “5.19” plummet, and the trading volume reached a record high.
Original title: “Coin Metrics 丨519. How did the stablecoin perform during the slump? 》
Written by: Nate maddrey
In the past few weeks, after a series of negative news, the cryptocurrency market has been tested. The collapse in the price of cryptocurrencies is also a big test for stablecoins, which are increasingly becoming an important part of the ecosystem .
On May 19, a flash crash caused by liquidation caused the price of Bitcoin to drop to nearly $30,000 within a few hours. As prices fall, investors are often eager to trade their crypto assets to Tether (USDT), USDC, DAI and other stable currencies. At the same time, the liquidation event triggered by the price drop will result in the sale of stablecoins used as collateral. This sudden shift in supply and demand may disrupt the price of stablecoins from the $1 peg and threaten their stability.
In general, stablecoins have weathered this storm relatively well. The price of stablecoins temporarily surged after the flash crash. But most stablecoins are still below US$1.01 and fell back to below US$1.005 within 6 hours.
In contrast, during the plummet in March 2020, the price of stablecoins soared above $1.05, and the prices remained high for the next few days. Although DAI rose well above its price target of $1 during March 2020, due to some improvements in MakerDAO, this time it maintained a price closer to the anchor.
May 19 was also a record day for stablecoin trading volume. Tether (USDT) alone has a transaction volume of more than 70 billion U.S. dollars, which is more than Bitcoin (BTC) and Ethereum (ETH). USDT is often used to trade with BTC, ETH and other crypto assets, which may account for the majority of trading volume.
Unsurprisingly, the number of stablecoin transactions also peaked on May 19, exceeding 1.5 million. Most of these transactions are due to the Tron version of Tether (USDT_TRX).
Compared with Ethereum and Bitcoin, Tron has the lowest transaction fees, which makes it an option for use cases such as sending relatively small transactions or transferring funds between exchanges.
Tether is issued on multiple platforms, including Omni (built on Bitcoin), Ethereum, and Tron. In the past year, Tether’s supply has shifted to Tron, which now accounts for 53% of Tether’s total supply (across these three platforms).
However, despite USDT_TRX leading in transaction volume and supply, the Ethereum version of Tether (USDT_ETH) has still had more transfer value in the past few weeks, indicating that Ethereum and Tron version of Tether have different usage scenarios.
Overall, in terms of the total supply of stablecoins, Tether is still the leader. But others are also growing rapidly. Since May 12, the supply of USDC has increased by more than 6 billion, and the total amount has exceeded 20 billion.
Since the beginning of 2021, the supply of USDC has been growing at a faster rate than Tether, and its growth rate has increased significantly in the last month. With the recent announcement of raising $440 million in funding for Circle, the company behind USDC, USDC’s momentum should only increase from here. Tether is still the highest, but if the current trend remains the same, USDC may soon catch up.
In the past week, the cryptocurrency market has mostly traded sideways after a mid-month crash. The prices of BTC and ETH both dropped significantly, dropping by 35.2% and 68.3% respectively. Amidst market volatility, USDC continues to rise, with total supply increasing by 17.8% on a weekly basis, with a total of more than 21 billion.
On May 19, the value of Wrapped BTC (WBTC) chain transfers soared to 2.9 billion U.S. dollars, and has exceeded 1 billion U.S. dollars a day on average thereafter. The figure below shows the value of WBTC transfers smoothed using a 7-day rolling average.
After the supply of WBTC dropped to about 108,000 at the beginning of this year, it has grown to more than 181,000. Widely used in DeFi, this may indicate that WBTC is becoming an increasingly important part of the DeFi ecosystem.
The average gas price of Ethereum climbed above 324GWEI on May 19. But since then, it has fallen back to a lower level. The average gas price on May 27 was 38 GWEI, the lowest value since December 2020.
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