Even in the Bitcoin and altcoin market this week, all roads lead in one direction: the Federal Open Market Committee (FOMC) meeting. It seems that the majority of crypto traders are preparing for the meeting to take advantage of the price action. Obviously, the market is preparing for volatile action, but it’s unclear how long it will last after the FOMC decision.
The biggest altcoin inflow of recent times has been seen
A development has come to the fore, proving that crypto traders expect volatility. There has been a massive influx of stablecoins into exchanges over the past few days. There has been a massive spike in stablecoin transaction flow to exchanges this week, mostly with Tether. Analysts at CryptoQuant note that the strong entry is a clear sign that the market is preparing for the big news of the week. Elcryptotavo, an analyst at on-chain data source CryptoQuant, said:
As we prepare for the news this week, there has been a massive influx of exchanges, especially USDT.
On July 26, we saw an abnormal increase in exchange deposits related to the Tether stablecoin. To a lesser extent, the same is observed with other stablecoin entries on exchanges.
Stablecoin regulations are on the agenda
Lawmakers in the US are in the process of agreeing to tighter regulation of stablecoins. If all goes as planned, the bill is likely to move forward in Congress by September. The move for stablecoin law has been spurred by demands for strict regulation in addition to existing rules. As we reported on cryptokoin.com, increasing calls for regulatory action on stablecoins have intensified following the recent collapse of Terra’s UST.
Additionally, UK authorities are planning to use stablecoins to make payments under the Financial Services and Markets bill. The country’s lawmakers believe that cryptocurrency offers huge potential in transforming the country’s financial landscape as a leader in digital finance. The country also aims to control crypto fraud with legislation.
Total stablecoin supply down
Meanwhile, interesting research on stablecoins has emerged. Equity markets and risk assets faced turbulent times due to rising inflation and other macro factors. Therefore, the global total stablecoin supply has dropped by about 18.8 percent at the end of the second quarter of 2022. Stablecoins are cryptocurrencies pegged to fiat currencies such as the US dollar. Such tokens leverage Blockchain technology and are backed by a mix of cash reserves, business assets, and other real-world assets.
The supply pattern was described in a report this week by Arcane Research. Arcane’s report examined supply data for major tokens such as USDT, USDC, BUSD, DAI, MIM, USTC, and others. The data showed that around May 2022 the total supply was over $180 billion. That figure fell to $151.3 billion at the end of the second quarter, marking an 18.8 percent drop in global supply. The massive drop is worth about $35.1 billion and marks the largest quarterly supply drop in stablecoin history, according to the report.
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