Stablecoin exchange inflows are up, which could mean the crypto market is headed for an eventual recovery, say researchers for Bank of America.
In a Friday report, analysts Alkesh Shah and Andrew Moss said that despite digital assets behaving like “risk assets,” stablecoins flowing into exchanges touched $490 million the week before the report—a 58% seven-day increase and the third consecutive week of inflows.
This is a healthy sign as “people using them for real world use cases like payments/remittances are adopted,” according to the report.
Stablecoins are cryptocurrencies which are backed by fiat currencies, like dollars, or other real-world assets.
They are used by people to quickly enter and exit positions in other coins or tokens when trading without the need to convert to a hard currency, such as U.S. dollars.
Bank of America’s report added that “three consecutive weeks of [stablecoin] inflows indicate that investors may be selectively increasing digital asset exposure after shifting defensively.”
The crypto market has been battered this year—along with U.S. stocks—as investors put their money into what are perceived to be safer assets, like the U.S. dollar, and avoid risk.
Cryptocurrencies are generally considered to be risk assets. Bitcoin, the biggest digital asset by market cap, has largely performed like a tech stock this year, Arcane Research data shows. This is different to how proponents of the asset claimed it would behave—championing the cryptocurrency as an "uncorrelated asset" or an inflation hedge.
And it is down 72% from its all-time high of $69,044, today priced at $19,133, according to CoinGecko.
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