One Key Metric Suggests The Market’s Downturn Will Be Shortlived

If you are following the cryptocurrency news lately and especially the Crypto Twitter community, you have probably seen a lot of tweets about metrics and things that are actively affecting the crypto market. In the latest series of tweets, we have one key metric which shows that the cryptocurrency market’s downturn will be short-lived this spring.

According to data from the blockchain analytics company Coin Metrics, the value of all US dollar stablecoins (USDT, Binance USD, USD Coin and others) is on the verge of passing $8 billion – a metric which managed to rise by 20% in the past month.

CM has added Huobi dollars (HUSD) and Binance dollars (BUSD) to their community data. Stablecoin supply in the sample is just shy of $8b collectively. My guess is it passes that threshold tomorrow. https://t.co/aEOeZIpiDk pic.twitter.com/B9WPd1mbsM

— nic carter (@nic_carter) March 29, 2020

Many Twitter analysts believe that this is the one key metric that suggests the crypto market will perform well moving forward. As to why this is bullish in the Bitcoin and altcoin news, one digital asset manager named Charles Edwards noted that “major changes in Tether’s market capitalization have led Bitcoin’s price over the last 1.5 years.”

For instance, before the nearly 50% crash in November 2018 which saw BTC plunging from $6,000 to $3,150, we saw that the rest of the crypto market fell even further. The amount of USDT back then also fell by hundreds of millions – as pictured in the tweet below.

Major changes in Tether's Market Cap have led Bitcoin's price over the last 1.5 years.

5 January 2020 was no different.

A healthy signal.

Keep it printing 🖨️ pic.twitter.com/dfe0dBJzwh

— Charles Edwards (@caprioleio) January 13, 2020

This is the one key metric that shows that if this historical trend holds true, crypto assets are going to see some strong upside and may be bottoming. All of this makes sense even though there are a few details as to how can one deposit US dollars and receive the USDT stablecoin in return.

Su Zhu, who is the CEO of Three Arrows Capital, summed this up nicely in 2019, writing that with so much money sitting on the sidelines (a lot of which is in stablecoins), BTC could appreciate rapidly. He said:

“There is an estimated $2B in cash sitting at crypto funds/holdcos. Theres another $2B+ sitting in stablecoins, and another $2B sitting at exchanges/silvergate/signature. This is $6B fiat already onboarded to crypto to buy your bags. Imagine thinking we need new money to hit $10k.”

Even though the macro backdrop is different in 2020 compared to Su Zhu’s view in 2019, historical precendent shows that the coming months could be rather bullish for the market as it is clear that there is money on the sidelines waiting to enter the space.