Why is the market value of stablecoins skyrocketing?

Since the black Thursday plunge, the market value of stablecoins has almost doubled. But the exact cause of the skyrocketing is still unknown.

To clarify how different stablecoins are used, we analyzed the number of stablecoins that were transferred in a day and created a heat map to show daily usage patterns.

USDT-ETH is widely used from around 2:00 to 16:00 UTC, which corresponds to the opening hours of Asian and European stock markets.

Before March 12, PAX transactions also seemed to be mostly concentrated between 2: 00-16: 00 UTC (although not as intensive as USDT-ETH). But starting in April, PAX’s trading hours have obviously become more dispersed.

Before March 12th, USDC usage in the United States was slightly denser. However, after March 12, the usage of USDC between 1:00 and 8:00 (UTC) has increased significantly, which corresponds to the time point of the Asian market.

DAI transactions are mainly concentrated in US working hours (14: 00-22: 00).


Since the black Thursday plunge, the market value of stablecoins has almost doubled (although most non-stablecoin assets have fallen).

As of May 7, the total market value of stablecoins has grown to more than $ 10 billion.


There are already many theories to explain the reason for this growth.

Some people speculate that more and more investors are holding stablecoins as “dry powder” (the total amount of cash available for investment) in anticipation of a new round of bull market. It has also been suggested that this is a response to the shortage of dollars, or a general pursuit of security. Another argument is that Asian OTC traders are investing in stablecoins as a channel to the cryptocurrency market.

Although the exact reason for the rise in market value is not yet known, the data on the chain can help us find clues.

In this week’s “State of the Network”, we will delve into the on-chain circulation data, analyze the usage patterns of different stable coins, and reveal some different theories about market value growth.

Stablecoin Transfer Heatmaps

To help clarify the usage model of stablecoins, we have broken down the trading volume of stablecoins by time period.

The heat map below shows the stablecoin transaction volume of different Ethereum stablecoins at different times of the day. The X axis is the date, starting in early February. The Y axis is the number of hours in a day, ranging from 0-23 (UTC time zone). The coloring represents the volume of transactions that occurred during this hour. Thus, for example, the cross-section of March 1 on the X-axis and the cross-section of 0 on the Y-axis represent the transaction volume that occurred between 12:00 and 1:00 on March 1.


We first investigate the transaction model of Tether issued by Ethereum (USDT-ETH).

USDT-ETH has a clear trend of a large number of transactions from 2:00 to 16:00 (UTC), which corresponds to the opening period of Asian and European stock markets. Trading decreases at the end of the day-only very few transactions occur after 20:00 (that is, when the New York Stock Exchange closes).

Since mid-March, transaction volume has also increased significantly. Near the end of April, a large amount of red (that is, high volume) appeared, which seems to correspond to the opening time of the Asian market.


The heat map above shows the total number of transactions per hour, and the heat map below shows the number of transactions that occurred during that hour as a percentage of the total number of transactions for the day.

For example, if there are 100,000 USDT-ETH transfers per day, of which 6,000 occur between 8:00 and 9:00 UTC, then the transaction volume for that hour will account for 6% of the total daily transaction volume and will be painted yellow / Orange.

In this way, the daily usage pattern will be a little clearer, regardless of the total number of transactions.

The heat map below also shows that USDT-ETH is mainly traded during Asian and European hours, and is highly active before the Asian market closes. This supports the theory that “Asian traders are using USDT-ETH”.



Paxos (PAX) usage has also increased significantly since March 12. In fact, since March 12, the average daily trading volume of PAX has tripled, reaching a record high of 24.4K on May 5.


Therefore, PAX has surpassed USDC and DAI in daily transaction volume.


Before March 12, PAX transactions also seemed to be mostly concentrated between 2: 00-16: 00 UTC (although not as intensive as USDT-ETH).

But starting in April, PAX’s transactions have obviously become more dispersed throughout the day. The data circulating on the chain indicates that PAX may be increasingly used for non-institutional and global use.



USDC had a huge activity (a lot of transactions) on March 12 and the week after, but it has since declined.

It is worth noting that MakerDAO added USDC as a collateral option on March 17, which is probably the reason for this wave of trading craze.


Before March 12, USDC activities in the United States were slightly more intensive. However, after March 12, USDC usage between 1:00 and 8:00 UTC has increased significantly, which corresponds to the trading hours in the Asian market.

Interestingly, USDC has several consecutive days in April, and nearly 20% of transfers occur within an hour every day. In our research, no other stablecoin’s transaction volume exceeded 12% in one hour.



Similar to USDC, DAI’s trading volume increased significantly on March 12 and the following days, but has since declined.


DAI transactions are mainly concentrated in US working hours (14: 00-22: 00). However, DAI transactions are relatively fragmented and not as concentrated as USDT-ETH.


in conclusion

The stablecoin trading model shows that different stablecoins may be used for different purposes and are favored in different places.

The USDT-ETH transfer is concentrated in Asian and European market hours. USDC is also concentrated in Asian market time, but not as intensive as USDT-ETH. PAX transactions are more fragmented, which may indicate that it is used for non-institutional purposes. Most DAI transfers occur during the US market.

Stablecoins are an important part of the cryptocurrency ecosystem and will continue to grow. We will continue to pay attention to stablecoins, and track the use and growth of stablecoins as they continue to develop.

Network data insight

Summary index


Both Bitcoin (BTC) and Ethereum (ETH) had strong performances in the week before BTC halved. When the price approached $ 10,000, the market value of BTC briefly exceeded $ 180 billion. However, at the end of the week, the market value of BTC fell back to around $ 160 billion.

This week, BTC and ETH transaction fees have risen again by more than 30%, which is another increase after last week’s ETH fee increase of 31% and BTC fee increase of 170%. Fee growth is a positive signal that the demand for blockchain space is growing, which is generally a sign of increased network usage.

Network highlights

The computing power of BTC increased to an all-time high before halving. As the halving approached, miners were eager to obtain 12.5 BTC reward blocks, resulting in increased computing power and reduced average block time.

The figure below shows the BTC hashrate after smoothing using a 7-day rolling average.


BitMEX and Bitfinex’s BTC holdings have reached a new low after plunging on March 12. Bitfinex currently holds 93.8K BTC, lower than 193.9K on March 13. BitMEX’s BTC supply has now dropped from a peak of 315.7K on March 13 to 216.0K BTC.


At the same time, the number of Ethereum held by Bitfinex continues to climb to new highs. As of March 10, Bitfinex held more than 5M ETH.


Market data insight

The most noteworthy market news this week is the recognition of Bitcoin by hedge fund manager Paul Tudor Jones. In a note shared with customers, he cited Bitcoin’s attractive value preservation features in the face of the monetary stimulus he called “big currency inflation.”

The market reacted rationally to this news, and Bitcoin’s performance surpassed most other major cryptocurrency assets. This marks the second consecutive week that Bitcoin has performed well and is worth observing.

In the past year, the correlation between Bitcoin and other assets has been very high, and the dispersion of returns is also very small, but history tells us that these quiet periods are intertwined with the period of major changes in the cryptocurrency market. In our previous State of the Network, we commented on the changes in these systems and the difficulties it brought to fund managers.

The relatively mild reaction and the lack of big moves in traditional high-beta altcoins indicate that we are still far from reaching the irrational investor sentiment that is characteristic of the late market bubble.


Surprisingly, Paul Tudor Jones Jones ’prediction of an uncontrolled monetary stimulus leading to an increase in inflation is still a reverse view. This reverse view has not been based on 5 years and 5 years. Inflation expectations are set to price. It is generally believed that this method of measuring inflation can replace long-term inflation expectations, and it is less sensitive to current demand shocks or food and energy price volatility.

So far, although everything has happened, inflation expectations are stable and the Fed ’s credibility is still intact. In short, the market believes that the Fed will do what is necessary to defend its stable prices. The problem is that we may face a situation where the dual tasks of Fed maximum employment and price stabilization become untenable, and it will have to favor one of them. These concerns are manifested in the years following the 2008 financial crisis. Rising inflation expectations have led to years of assets benefiting from rising inflation expectations. In the end, the inflation scare proved to be incorrect because the Fed can find a balance and provide enough stimulus to cure the economy without causing excessive inflation.

The market thinks it will be the same this time. But it is clear that if the market is not correct, we can see that Bitcoin will be more expensive in the future.


CM Bletchley Indexes (CMBI) Insight

All CMBI and Bletchley indexes gave up most of last week’s gains, except that Bletchley 40 and Bletchley 40 Even indexes were the only positive gains this week, returning 4.6% and 5.1% respectively. The CMBI bitcoin index fell 3.9%, but the biggest drop this week was the CMBI Ethereum index, which fell 11.1%.

Even a weighted index is a mechanism for increasing exposure to small assets, so this mechanism can often provide a different rate of return than a market-weighted index. This week’s return proves this point, even if the weighted index excluding Bletchley 10, this week’s performance is better than the market value weighted index. This performance shows that assets with lower weights in each index are better performing assets.


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