Another Bull run for Crypto, or is something else happening?
Here is our pick of the 3 most important Stablecoin news stories during the week.
This week the numbers came in, stablecoins are growing once again at a rapid rate. In the past this has been a signal that money is coming into the Crypto ecosystem and that BTC is about to start another bull run. But maybe there is another dynamic at play as the ecosystem itself adjusts?
On October 13, 2021, the largest stablecoin market cap held by tether was $70.9 billion and it is now $73 billion. The stablecoin market USDC was $33.3 billion and today it’s $34.2 billion. While tether’s (USDT) market cap jumped last month by 6%, USDC’s increase was slightly less with a 5.8% increase in 30 days.
Out of the top five stablecoins in terms of overall valuation, the stablecoin DAI, issued by Makerdao, rose the most with a 27.3% jump last month.
DAI is Pegged to the U.S. dollar and backed by a variety of cryptocurrencies, DAI has a special place in the heart of crypto enthusiasts. Unlike its larger, more centralized counterparts like Circle’s USDC and Tether’s USDT, DAI cannot be blacklisted, censored, or shut down. It is truly cut from the same cloth as Bitcoin and Ethereum and is really different in nature and operation to Tether and Circle.
Meanwhile in Washington DC, two of the top 10 issuers hailed this week’s report from the President’s Working Group (PWG) on Financial Markets, which recommended stricter oversight of this mushrooming part of the cryptocurrency market, as a welcome step toward regulatory clarity.
By sharp contrast, lobbyists for the cryptocurrency industry were critical of the 22-page report’s prescriptions. Both Coin Center and the Chamber of Digital Commerce argued that the recommended regulatory oversight could stifle innovation and unfairly single out stablecoins among payment systems like PayPal that work in similar ways
So in summary, MakerDAO which is very innovative outperforming the two most popular and traditional stablecoins Tether and Circle, who in turn are welcoming Washington’s regulatory moat. Sound familiar? Even in the young world of Crypto we have establishment players and outside innovators. The big question currently being debated within the political sphere is, can regulators and regulations be a help or a hindrance to innovation?
Back to the original idea for this week. Is this new money coming in for another BTC bull run or is the market placing bets on something different? Maybe, MakerDAO is the canary in the coal mine (to mix my metaphors) and the market is betting on regulation stifling BTC while ETH and its associated Defi world will flourish?
Lets see if that Canary is still chirping happily away in a few weeks. One to watch.
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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