Thread by @fundstrat

A 🧵 on stablecoins and Ethereum
1/
Stablecoins is the singular most successful crypto product and the only one to move into the "real world" with $250 billion in total assets

we are in the earliest days....
(keep reading plz)

@fs_insight @SeanMFarrell

2/
Stablecoins are a good business model and attracted the interest of banks $JPM $V and even merchants $AMZN $WMT

- issuers of stablecoins generate significant profits as the collateral (USD) can earn yield and this is not paid to holders of the stablecoin (yet)

@fs_insight @SeanMFarrell @WSJ @business

3/
Merchants like stablecoins but there is lower transaction costs and the merchants do not take the continuous loss from "chargebacks" which can run as high as 5%-6% of transaction dollar volume

- and BONUS: a large untapped market of users who do not use credit cards

@fs_insight @SeanMFarrell

4/
In fact, 80% of USD stablecoin volume is outside the US

- Singapore, Hong Kong and Japan nearly 40% of stablecoin volume
- in some nations USDT trades above $1.00 because of high demand
- even real estate transactions are paid with stablecoins

@fs_insight @SeanMFarrell

5/
US gov't realizes stablecoins = two structural benefits:

first, USD dominance surges in stablecoin/crypto:
- USD = 27% global GDP
- USD = 57% of global central bank reserves
- USD = 88% of liquid financial market
- USD = 100% of stablecoin denomination

The more assets move to the blockchain, the greater the demand for stablecoins:

= greater USD dominance
@fs_insight @SeanMFarrell

6/
The second benefit to USD: Stablecoins collectively now the 12th largest holder of US Treasuries

- Tether $USDT owns more UST than Germany

@fs_insight @SeanMFarrell

7/
Looking ahead, stablecoins is the "front end" of the convergence of financial services and crypto:

- the next generation may prefer to bank to be crypto-friendly company $HOOD $CRCL $COIN $JPM $GS

- hence, as banks likely to add crypto to their balance sheet Bitcoin $BTC and Ethereum $ETH (staking)

@fs_insight @SeanMFarrell @WSJ

8/
TREASURY STOCKS = BACKBONE FUTURE FINANCE:
In future, Banks, credit card issuers ($PYPL) and biz likely hold "crypto" on balance sheet as working capital:

- thus, "pure play" Treasury companies like $MSTR $SMLR $SBET $MTPLF $DFDV $UPEXI
- arguably represent the "high margin" component of future bank and financial institutions architecture

These $ETH $SOL Treasury stocks earn yield from staking which is a positive feature

@fs_insight @SeanMFarrell

9/
This is positive for the layer 1 blockchains issuing stablecoins

Why Ethereum? $ETH

- the majority of stablecoins minted on Ethereum
- most of the "real world assets" (RWA) in crypto are on Ethereum such as stablecoins, tokenized equities, tokenized real estate

@coingecko @SeanMFarrell

10/
Stablecoin fees are 30% of Ethereum $ETH network fees today:

- @SecScottBessent recently said >$2 trillion USD market for stablecoins is reasonable
- this is 10X exponential growth in network fees for $ETH Ethereum
- other nations may mint stablecoins = upside

@fs_insight @SeanMFarrell

11/
That is it for now

Thank you to the @fundstrat @fs_insight crypto team for the data:

Sean Farrell @SeanMFarrell
Thomas Couture
Tireless Ken @tirelessken

Get our crypto research at @fs_insightFSinsight.com/tlee-services