Has the interest in stablecoins returned post TerraUSD (UST) crash?

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 Has the interest in stablecoins returned post TerraUSD (UST) crash?
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The TerraUSD crash last week had left many market participants questioning the stability of stablecoins. The basic concept of stablecoins, which are projected to be more stable than other cryptos, was challenged during the crash. Investors and enthusiasts were questioning their judgment and research.   

But now, the stablecoin market is showing signs of recovery, with a minor rally of 0.7% and a volume gain of 21.28% on 24 May. On Tuesday, the entire stablecoin market cap stood at US$160,006,660,767 with a trading volume of US$70,919,814,898 in the past 24 hours.

Related read: What does Terra's (LUNA) realistic revival plan look like?

On Tuesday itself, TerraUSD (UST) was up by 10.67% and was trading at US$0.07665 with a 24-hour trading volume of US$9,20,61,747. Experts have also noted that leading crypto exchanges, such as Binance, Coinbase, has stopped their withdrawal of UST services. Exchanges such as OKX had announced the listing of various stablecoins, such as LUNA/USDC, SOL/USDC, NEAR/USDC, AVAX/USDC, etc., during this period. Exchange Ergo did the same and continued to lend support to the development of the USDC ecosystem.

Increase in trading volumes

Jeremy Allaire, CEO of Circle, said that the flight to quality and safety are being expressed in the spot markets on leading exchanges.

Related read: Why is Mirror Protocol (MIR) crypto soaring today?

This is evident with the increase in the trading volume, which surprisingly has significantly increased after the 12 May fall. In fact, Allaire highlighted 8.6 billion USDC were issued in the last one week, and 6.3 billion USDC were redeemed. This resulted in a net weekly increase of 2.3 billion USDC coins in circulation.

He added that as USDC is easy to create and redeem, its seamless integration makes it an efficient bridge between electronic dollars and digital currency dollars.

What do the stats say?

According to leading analytics firm Glassnode, the aggregate stablecoin supplies have taken a hit as they have reduced to US$8.4 billion in just a month. On the contrary, USDC expanded by US$ 2.64 billion last week and DAI shrank as many market participants as possible either closed their debt positions or liquidated them.

Further, Glassnode noted that as the UST de-pegged itself on 9 May, the USDC, DAI, BUSD traded up from US$1.01 to US$1.02.


Though it is too early to say whether investors are back putting their money in stablecoins, it seems the coins are stabilising at the moment. As the TerraUSD is showing signs of recovery, the stablecoin market is restabilising itself.

In the crypto market, one also must be mindful of the fact that crypto markets are often volatile, and its prices can change at any given point in time. Therefore, as a market participant one should do their respective research before entering space.

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