Low exchange volumes, the dominance of algorithms in the DeFi space, and increased demand for USDT and major coins indicate an increased preference for “capital parking” among investors. This is the conclusion made by Glassnode analysts.
As an increasingly hostile regulatory environment is established in the US, capital appears to be flowing out, and eastward in the digital asset sector.
Much of this hints to a generally risk-off environment, with the remaining capital concentrating in the more liquid majors,… pic.twitter.com/5IeQKOuaAV
— glassnode (@glassnode) June 5, 2023
The jump in transaction fees on the Ethereum network in May to the values of the bull market of 2021-2022, experts explained the activity of pools with ETH, WBTC, stablecoins and cbETH on Uniswap, rejecting the narrative about the hype associated with meme-tokens.
The popular DEX accounted for 7.7-14.4% of total gas consumption over the past month (+388% on average over the previous 30 days).
“It is noteworthy that only a part of these operations [на Uniswap] was organic – dominated by arbitration, MEV and algorithmic trading, experts pointed out.
Nine of the ten most active addresses were MEV bots. The largest of them conducted transactions for ~$3 billion.
Analysts have fixed the rotation of capital by crypto-investors in the direction of taking less risk – in bitcoin and stablecoins. Experts pointed to a drop in daily trading volumes in Ethereum futures to $12 billion against an average of $21.5 billion for the year.
“In contrast to the surge in activity on Uniswap, derivatives trading continued to decline throughout May. This indicates a weak interest on the part of institutionalists,” experts explained.
In support of the thesis, analysts cited the ratio of the volume of trading in the market of perpetual contracts of bitcoin and Ethereum. After parity at the end of 2022, the share of the latter began to decline and has now dropped to 34.5%, which indicates preferences in favor of a more “protective” first cryptocurrency, the experts emphasized.
Experts assessed the influx into digital assets by analyzing the realized capitalization of Bitcoin and Ethereum and the volume of stablecoins in circulation. They found that the monthly rate of receipts in digital gold amounted to $4.47 billion, in the second cryptocurrency by total market value – $3.5 billion. At the same time, investors withdrew $1.2 billion from “stable coins”.
The decline in the capitalization of the stablecoin segment was due to a drop in USDC and BUSD by $15.7 billion and $11.5 billion (values since the beginning of the year). The market leader – USDT – was able to enter a new ATH ($83.1 billion).
“This reflects a geographic divergence as US-regulated companies have historically favored USDC over USDT. With interest rates now above 5%, stablecoins have become less attractive, especially for investors with access to US capital markets. Tether has historically gained more acceptance in markets outside of the Americas, where national currencies are often weaker and access to dollars less common.” experts explained.
Analysts noted that as an increasingly hostile regulatory environment builds up in the US, capital is moving east into the digital asset sector.
Recall that Kaiko experts drew attention to the weakening of the correlation between Bitcoin and Ethereum.
Earlier, the founder of LookIntoBitcoin, Philip Swift, pointed to the prospects for the resumption of the rally of the first cryptocurrency, citing its technical picture.
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