Thread by @mrink0

how do stablecoin flows impact crypto prices?

is the mkt still PvP as @Pentosh1 suggests?

short thread below 🧵

https://twitter.com/pentosh1/status/1683053674208063488

stables have been bleeding mkt cap for the better part of two years now

on a relative basis, the current drawdown now rivals the 2018 bear

if we run a regression, we find that total stablecoin mkt cap has a strong correlation to BTC

r = 0.68
r^2 = 0.47

and it has an even stronger correlation to ETH

r =0.80
r^ = 0.64

this is likely thx to ethereum’s defi ecosystem

stablecoin mkt cap has the *strongest* correlation to defi tvl

r = 0.80
r^2 = 0.65

this makes sense, as most ppl onboard to defi using stables

more stables = more defi

overall, there doesn’t appear to be any discernible lead/lag between BTC and stables mkt cap

we can test this by running a correlation analysis between the two using different lags ranging from -10 to 10 days

what we find is that BTC and total stables mkt cap has the highest… https://t.co/qwYGPjXLuotwitter.com/i/web/status/1…

if we zoom out to a 180D growth rate, we can see that stables mkt cap led BTC on the way up last cycle

but BTC lead stables on the way down

however, we shouldn’t put too much faith into this observed lead/lag dynamic, as we only have one mkt cycle to base the relationship off of

1-year growth rate:

tldr:

@Pentosh1 is right — continue copy trading

PvP mkt conditions will persist until we see stablecoin inflows, which will likely signal a broader return of retail and risk on

until then, have fun as alameda’s exit liquidity on base