Stablecoin reserves are one of the more crucial metrics in the broader cryptocurrency industry. An increase in balances can indicate bullish price momentum. Although there is a slow uptaking in reserves this week, the overall market momentum remains subdued.
Stablecoin Reserves Rise To No Avail
Whenever the stablecoin reserves across trading platforms rise, there is often a [temporary] bullish spell for most markets. However, this week has been slightly different, even though the reserves showed an apparent increase by several billion dollars. Even so, the markets have remained somewhat bearish all week and show no sign of reversing course ahead of the weekend.
While there is an apparent increase in stablecoins on July 14th, it doesn’t seem like they are used for trading significant crypto assets. Thus, one can argue that a $5 billion increase in reserves will not impact either way. Again, a correct assessment, as there is too much liquidity on exchanges to keep pushing prices down for some time to come. Unless there is an influx of tens of billions of dollars, the current status quo will remain.
What is even more intriguing is how the stablecoin reserves have been declining since early July. As soon as the BTC price began to increase, the supply of assets like USDT, TUSD, and BUSD went downhill. That trend has not fully recovered since the recent market onslaught, which is interesting for many reasons.
It seems unlikely that stablecoin reserves will continue to increase over the coming days. As the weekend is around the corner, more bearish pressure is likely to materialize. That is terrible news for all crypto markets, yet it is not entirely unexpected either. These past few weeks have been problematic in the price department and will continue to be for the foreseeable future.
Which Stablecoin Gains Momentum?
Following a temporary increase in stablecoin reserves, the question becomes which asset is responsible for this rise. Contrary to popular belief, it is not Tether’s USDT this time. Nor is it USDC, DAI, TUSD, or any other asset commonly used on exchanges or in DeFi. Instead, one has to look at a very different asset that traders and speculators often overlook.
BUSD, the stablecoin of the Binance Smart Chain ecosystem, notes a strong increase in stablecoin reserves. This uptrend has been brewing for some time now and began in late November 2020. Its uptrend has not diminished despite a minor dip in April 2021. There appears to be a growing demand for BUSD lately, which is somewhat surprising.
Considering there was under $500 million in BUSD stablecoin reserves in mid-November 2020, the landscape looks very different today. The stablecoin is on the cusp of surpassing $7 billion in reserves this weekend. Unfortunately, those reserves do nearly nothing to push the Bitcoin price higher, making one wonder what people are using BUSD for these days.