BTW not to be a downer but the stablecoin supply being up is less obviously +++ than a lot of people have claimed.
There are plenty of reasons why it could be good -- more USD flowing into the ecosystem could of course be used for buying crypto ...
There are plenty of reasons why it could be good -- more USD flowing into the ecosystem could of course be used for buying crypto ...
https://twitter.com/fintechfrank/status/1396609126650818561?s=20
... but, it could also be used to be parked in a yield farm, or as collateral for someone trying to get super short, or whatever.
Also, consider a common trade -- USDT gets really rich, MMs (such as Alameda) create USDT to sell it >1. This increases stablecoin supply!
Also, consider a common trade -- USDT gets really rich, MMs (such as Alameda) create USDT to sell it >1. This increases stablecoin supply!
Why does USDT (or any stablecoin) get rich? Various reasons -- maybe people really need something USD-like and so bid it up (because they're not creating for whatever reason). But maybe the BTC/USDT market has significant activity.
The direction which can cause USDT to get rich is lots of BTC *selling* -- specifically in the USDT markets, yes, but still, lots of net selling vs. USDT can cause this trade, which is a big reason for stablecoins to get created.
More likely, though -- when this happens, it's because of spot buying vs. futures selling (and notice that premia have been a *lot* lower lately). And that's just neutral, which is (as often happens) the most likely takeaway.
To be clear: I don't know where every new stablecoin ended up, and I don't *know* which of these narratives is right. I'm just contesting the idea that it's definitely bullish.
Don't shoot the messenger!
Don't shoot the messenger!
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