“Why Crypto Whales are Accumulating Stablecoins and What it Means for the Market”

Whales prefer stablecoins

On May 24, analysts at the Santiment platform reported that crypto whales have paused purchases of bitcoin (BTC) and are actively accumulating stablecoins, preferring USDC and DAI.

“The number of bitcoins in the wallets of whales remains virtually unchanged. But we see large holders hoarding stablecoins, which increases their future purchasing power.”

According to Santiment data, 37% of addresses with balances from $100,000 to $10 million hold USD Coin. 39% hold MakerDAO’s DAI algorithmic stablecoin, and only 6.4% of whales own Binance USD. The platform did not provide data on USDT, which is currently the absolute leader in terms of market capitalization.

Pump after dump

Whales began to accumulate stablecoins in mid-April. Around the same time, BTC reached a local high of $31,000. Since then, the price of the asset has dipped 13.7% to current levels, because large holders began to take profits.

The current accumulation probably means that large investors are planning to buy off the next big market drop. This is consistent with the fact that the flow of funds to centralized exchanges has fallen to cycle lows, and a decrease in liquidity is usually followed by an increase in volatility. However, whales can also use stablecoins to fund Bitcoin short positions.

Regardless of what investors are going to do with their stablecoins, the stablecoin ecosystem is seeing significant changes. The market capitalization of Tether is breaking one record after another, while USDC, on the contrary, is losing ground. Recall that just a few months ago, after the collapse of the Terra ecosystem and the FTX exchange, members of the crypto community actively criticized the USDT issuer and called for abandoning its use. However, that all changed after USD Coin briefly lost its peg to the US dollar amid the collapse of Silicon Valley Bank.

“The combination of the SVB episode, the aggressive actions of the regulators and the impending default has completely turned the tide in favor of Tether,” analysts at Santiment said.

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