The current state of the stablecoin market: Market value shrinks by $32.8 billion, USDC is on the rise

The recent sharp drop in crypto asset prices in the short term has triggered large-scale liquidations and chain reactions. First, CeFi lending platform Celsius suspended withdrawals and transfers due to user runs on stETH depegging; then well-known investment institution and market maker 3AC was reported to sell assets to repay debts, and there is still at least about 660 million US dollars of debt exposure that may constitute a default; and the community of Solend , the largest lending platform on Solana , proposed to take over a giant whale account in the hope of reducing liquidation risks, which caused a farce. Under the shadow of the continued decline in the crypto market, these epitomes of liquidity crises have led to widespread concerns among investors about market liquidity risks.

What is the liquidity in the market now? PAData analyzed the recent changes in the amount of funds and net inflows in exchanges and found that:

1) Since April, the market value of stablecoins has decreased by $32.82 billion, with an overall decline of 17.82%. The market value of USDT has decreased by $14.59 billion, accounting for 44.45% of the total market value decline, while the market value of USDC has increased by $3.21 billion, an increase of 6.21%, and the market value gap between the two has further narrowed.

2) Since April, the stock size of stablecoins in major exchanges has remained basically stable, with only a decrease of US$1.96 billion. However, affected by the sharp drop in the market value of Bitcoin, stablecoins have gained higher purchasing power while their stock is basically stable. Since April, the purchasing power index SSR has dropped from 9.20 to 4.48, a drop of 51.30%.

Stablecoins have always been an important window for observing market liquidity due to their function as a medium of exchange. The issuance of more stablecoins usually means increased liquidity, and vice versa. PAData has counted the changes in the market value of 18 stablecoins with larger market value since April this year, including USDT, USDC, BUSD, DAI , FRAX, TUSD, USDP, USDN, USDD, FEI, HUSD, GUSD, LUSD, SUSD, UST, CUSD, USDK, USDS. According to statistics, the total market value of 18 stablecoins was about 184.2 billion US dollars on April 1, but from May 8 to May 14, the total market value fell sharply, from 183.73 billion US dollars to 157.86 billion US dollars, a decrease of 25.9 billion US dollars, a drop of 14%, equivalent to a 2% drop every day during this period. After that, from June 10 to June 21, the total market value experienced a second significant drop in a short period of time, from 157.88 billion US dollars to 151.38 billion US dollars, a decrease of another 6.5 billion US dollars, a drop of about 4%. Overall, since April, the market value of stablecoins has decreased by 32.82 billion US dollars, with an overall decline of 17.82%.

It is worth noting that the market capitalization of most other stablecoins has been on a downward trend since April. For example, the market capitalization of USDT, which has a larger market capitalization, has dropped from $82.04 billion on April 1 to $67.45 billion on June 21, a decrease of $14.59 billion, accounting for 44.45% of the total market capitalization decline. The market capitalizations of BUSD and DAI also fell slightly during the same period, decreasing by $190 million and $2.90 billion, respectively, accounting for 0.57% and 8.84% of the total market capitalization decline, respectively. Only the market capitalization of USDC has been on an upward trend since April, rising from $51.71 billion to $54.92 billion, an increase of $3.21 billion, or 6.21%. Moreover, the market capitalization gap between USDC and USDT has further narrowed. The difference between the two was $30.3 billion at the beginning of April, and by June 21, the difference had narrowed to $12.5 billion. If USDC continues to grow, the stablecoin market may be reordered.

Although the total market value of stablecoins has changed significantly, the stock size of stablecoins in major exchanges has remained basically stable. According to statistics, on April 1, the stock of stablecoins in exchanges was about 26.94 billion US dollars. As of June 20, the stock of stablecoins in exchanges was about 24.98 billion US dollars, a decrease of only 1.96 billion US dollars, a drop of only 7.28%.

However, affected by the sharp drop in BTC market value, stablecoins have gained higher purchasing power while their stock is basically stable. The stablecoin purchasing power index SSR is the ratio of BTC market value to stablecoin market value. The higher the value, the less BTC a unit of stablecoin can buy, and the lower the purchasing power. Conversely, the more BTC a unit of stablecoin can buy, the higher the purchasing power. According to statistics, the SSR index was 9.20 on April 1, but it fell to 4.48 on June 20, a drop of 51.30%.

In addition to the market value of stablecoins, the flow of mainstream assets in exchanges is also an important dimension for observing the development trend of overall market liquidity. If more mainstream assets flow into the spot market, it may bring greater selling pressure to the market, which may induce asset prices to fall. If more mainstream assets flow into the futures market, it may cause sharp fluctuations in asset prices. Whether it is a downward price or a sharp fluctuation, it may subsequently trigger debt liquidation, further pressuring liquidity.

In general, since April, about 147,300 BTC have been net outflowed from exchanges, of which about 223,200 BTC have been net outflowed from the spot market, and about 75,900 BTC have been net inflowed into the futures market. It can be seen that the selling pressure of BTC in the spot market has not increased, but the trading in the futures market is very active, which may cause the asset price to continue to fluctuate. From a smaller market cycle, the three weeks from May 16 to June 5 were the time when the selling pressure of the BTC spot market was the largest in recent times, with a total of 46,700 BTC net inflows into the spot market. The two weeks from May 9 to May 15 and June 13 to June 19 were the times when the price fluctuations in the BTC futures market were the largest in recent times, with a total of 122,800 BTC net inflows into the futures market.

Since April, about 56,000 ETH have flowed into exchanges, of which about 1,083,000 ETH have flowed out of the spot market, and about 1,139,100 ETH have flowed into the futures market. It can be seen that similar to the overall situation of BTC, ETH also has little selling pressure in the spot market, but trading in the futures market is very active, which may cause asset prices to continue to fluctuate. From a smaller market cycle, the three weeks from May 30 to June 19 were the time when the selling pressure in the ETH spot market was the largest in recent times, with a total of 179,500 ETH net inflows into the spot market. In the nine weeks from April 25 to June 21, the net inflows in the futures market were positive for eight weeks, with a total of about 1,611,500 ETH net inflows into the futures market.