Santiment: The growth of cryptocurrencies will be preceded by an increase in the capitalization of stablecoins

According to analysts at Santiment, as soon as investors start actively investing in stablecoins, prices for cryptocurrencies will go up even with a low supply of BTC and ETH.

Buyers will be waiting for the largest stablecoins to start increasing their market capitalization again, market experts from Santimen argue. Financial analysts believe that crypto-currency large and institutional investors, against the backdrop of tightening the policy of the Federal Reserve System (Fed), have invested money withdrawn from stablecoins in government bonds of the United States and other countries:

“The thing that gave hope to traders was that the market capitalization of stablecoins was rising in May of this year. But when the Federal Open Market Committee (FOMC) raised interest rates, recession fears began to really influence investor speculative decisions. It has become much more difficult for large holders to justify keeping aside so much dollar-pegged cryptocurrency.”

According to representatives of Santimen, the consequence of the decision of large investors is the storage of funds in treasury bills of the United States and other countries. Cryptocurrencies with the uncertainty that is observed in 2022 is too unattractive for them, financial analysts emphasized.

But as soon as there is at least some certainty in the markets, investor funds will begin to return to stablecoins, and then to cryptocurrencies.

Chainalysis analysts reported that the use of dollar-pegged stablecoins is growing in Latin America, especially in countries with high inflation and devaluation of the local fiat currency. In parallel, exchanges are getting rid of unpopular stablecoins. Huobi recently announced that it will be delisting HUSD and will no longer support trading in this stablecoin. All HUSD will be converted to USDT at a 1:1 ratio.