The stablecoin war escalates, who will pull USDT down from the throne?

Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), author: free and easy, released with authorization.

Babbitt Information (ID: bitcoin8btc)

, author: free and easy, released with authorization.

The war in the stablecoin market has obviously heated up this summer, and now that the summer is over, we might as well review the situation of mainstream stablecoins in the past three months.

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Stablecoins are competing for the throne, Tether still has an absolute advantage

Over the past three months, Paxos (Pax), USD Coin (USDC), and Dai (DAI) have shown strong growth trends, as measured by the number of addresses holding balances above $10. Both TrueUSD (TUSD) and Tether (both the Omni version and the ERC20 version of USDT) have experienced moderate growth, while Gemini Dollar (GUSD) has declined. The following table shows the growth of the number of addresses with a balance of more than $10 in major stablecoin addresses from June 1st to September 1st.

We can think of the total number of addresses with a balance of at least $10 as an approximate measure of the total number of users. Of course, the $10 threshold seems arbitrary, so why not use $1 or $100? In fact, we usually use a $10 threshold to estimate the number of users, because this number is small enough to reach retail investors, but it is also large enough to exclude dust accounts.

Although the growth rate of Tether (including Omni and ERC20 versions) has not been as high as that of other stablecoins in the past three months, as far as the ERC20 version of USDT is concerned, its growth rate is very fast (however, this is at the expense of the Omni version of USDT of). The transition from USDT to USDT-ETH is proceeding rapidly. According to the trend, in the next few months, USDT-ETH will surpass USDT in most major indicators. The table below shows the total number of addresses for USDT and USDT-ETH worth more than $10, respectively.

Total supply is another important metric for stablecoins. Assuming each USD stablecoin is worth $1, the total supply represents the approximate market cap of the stablecoin. During the summer (June 1-September 1), the supply of PAX, USDC, and Tether all increased, while the supply of DAI, TUSD, and GUSD decreased.

Similar to the results for the total number of addresses at the $10 threshold, Tether still dominates in terms of total supply. The following table shows the total supply of each major stablecoin as of September 1:

Finally, looking at the price growth rate of stablecoins over the past three months (i.e., the daily growth rate compared to June 1st) provides an approximation of price stability. This is an important consideration for stablecoins, since stablecoins are all about price stability (hence the name). As shown in the chart below, DAI, GUSD, and Tether have all experienced relatively volatile periods in the past three months, while PAX and USDC have been relatively more stable.

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Weekly network data summary of mainstream currencies

BCH has seen a surge in active addresses and transaction volume, with both metrics up more than 200% over the past week. However, the adjusted transfer value of BCH only increased by 3.5%, which may be because these new transactions are small transactions.

In terms of the number of addresses, the number of Bitcoin addresses with a balance of more than 10 BTC recently hit a record high. As of September 1, a total of 157,216 addresses on the entire network met this standard.

The number of Ethereum addresses whose address balance exceeds the total index of one billionth has also recently hit a record high. As of September 1st, there were 5,923,953 addresses meeting this criteria, and with an ether supply of 107,568,118 ETH, this requires addresses to have at least 0.0108 ETH ($1.86 at current prices).

Weekly market data summary of mainstream currencies: the butterfly effect triggered a sharp drop in the market last week

Bitcoin was still the focus of the entire market last week, and despite a market-wide sell-off earlier, it has since rebounded and recovered all its losses, compared to other major assets that still experienced sharp declines .

Over the past three months, bitcoin has returned stellarly (+37%), while other assets have struggled, with most losing as much as half their value, including eos (-47%), stellar (-48%) and tron (-53%).

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August 28 No signs of market manipulation

The pattern of violent price fluctuations in the whole market is still continuing. Coin Metrics has done a lot of research on the issue of market manipulation, where futures exchanges (most notably BitMEX and CME) are significant trading activity and price discovery venues that allow traders to trade using leverage. Because of these factors, certain market participants are incentivized to trade in certain ways, thereby engineering price movements that can trigger forced liquidations, short squeezes and margin calls.

Despite previous examples of such activity, the sell-off that occurred on Aug. 28 did not leave any of the standard signs of market manipulation.

The earliest signs of increased trading activity appeared on Coinbase's BTC-USD market for 20 seconds at around 17:54 UTC. The three selling activities were traded at $10,240, and a total of 72 BTC (equivalent to about $740,000) was sold. This concentration of trading activity is unusual as there was no news-related catalyst prior to this, prices were fairly stable prior to this, and the three sell-off trades were relatively large, at a time when no other exchange was present similar transactions.

Although such aggressive operations may have triggered a market sell-off, we have not observed signs of a sustained sell-off, nor have we observed large spreads between major markets, so market manipulation in this case is likely not exist. One possible explanation is that the massive sell-off on Coinbase’s markets may have sparked a reaction in several trading algorithms employed by market makers and quant traders.

During periods of relative calm in the market, algorithms can interpret sudden concentrated sell-offs as informed traders (knowing information about underlying market movements) and adjust their trades accordingly. The initial reaction could snowball, as a small sudden change in price triggers the liquidation of leveraged futures positions, which in turn sparks further price declines.