As the cryptocurrency market capitalization fell from $2 trillion to as low as $1.55 trillion in the previous 48 hours, data shows a surge in stablecoin activity as investors try to reduce the losses caused by the market sell-off.
Bitcoin, the most popular cryptocurrency, plummeted below its $40,000 support zone on Friday, trading as low as $34,349.25, a loss of around $5,250 in one day and a 12.83 percent drop. Bitcoin has lost around a quarter of its value this year, indicating the beginnings of a cryptocurrency bear market.
Altcoins have fared much worse, losing over 30% of their value since the beginning of the year, falling from $1.35 trillion to $919 billion, a loss of $431 billion in market capitalization. As a result, the altcoin market has practically lost its trillion-dollar status, with all of them posting double-digit losses for the year.
The daily trading volume of Tether’s USDT, the most capitalized stablecoin linked to the US dollar, has increased, according to data from Nomics. USDT trading volume increased by 68.74 percent from $68.45 billion to $115.50 billion between Thursday and Friday, the day of the crisis.
With a daily value of $109.21 billion on Saturday, the USDT trading volume showed no indications of declining. The second and third most capitalized stablecoins, Circle’s USDC and Binance’s BUSD, both experienced the similar surge.
Between Thursday and Friday, USDC witnessed a 126.13 percent increase in daily trading volume, rising from $3.98 billion to $9 billion, while BUSD saw an 86.18 percent increase in daily trading volume, rising from $3.40 billion to $6.33 billion.
On Friday, the trio had a combined transaction volume of $130.83 billion, which was more than Bitcoin’s daily transaction volume of $59.48 billion and Ether’s transaction volume of $43.69 billion on the same day. Even when the trading volumes of Bitcoin and Ether are added together, they still fall short of the trio’s daily transaction volume, indicating that traders are seeking refuge in the stablecoin during this weak market.
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