Renowned investment bank Morgan Stanley reported in a research report that the combined market capitalization of the two largest stablecoins, Tether (USDT) and USD Coin (USDC), is starting to fall again.
He considered this a sign of the resumption of quantitative tightening in the crypto financial system.
Morgan Stanley Evaluates The Cryptocurrency Market In Its Report
In the report published by Morgan Stanley, it was stated that the decline in the market value of the two stablecoins, which paused in mid-August, has resumed. Its market cap is currently about 10 percent lower than its April peak.
The bank stated that the availability and demand of stablecoins is an indicator of cryptocurrency market liquidity and leverage demand. A stablecoin is a type of cryptocurrency whose value is pegged to another asset such as dollars or gold.
Morgan Stanley states that changes in USDC’s market cap are keeping the price of Bitcoin (BTC) two months ahead. He says this is because the stablecoin is used by crypto institutions to buy or borrow other coins.
Morgan Stanley says it sees little evidence of re-leverage in the decentralized finance (DeFi) ecosystem.
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