The rapid rise in the share of stablecoins like Tether (USDT) in the cryptocurrency market may point to an upcoming crypto rallyaccording to analysts at US investment bank JPMorgan Chase.
The percentage of stablecoins in the total value of the cryptocurrency market has been on the rise, reaching new all-time highs in mid-June, JPMorgan strategists believe. Led by JPMorgan cryptocurrency market analyst Nikolaos Panigirtzoglou, the analysts provided their insight into the industry in the bank’s new investor note shared with Cointelegraph.
Published on June 15, the investors’ note says that the share of all stablecoins rose above 14%, or a “new all-time highwhich leads it to be well above its trend from 2020.”
“Stablecoin’s share of total cryptocurrency market capitalization looks excessively high, pointing to oversold conditions and a significant upside for crypto markets from here”strategists said.
According to analysts, the lower participation of stablecoins in the cryptocurrency market is associated with a limited ascent of the same. At the end of April 2022, strategists forecast a short-term drop in cryptocurrency prices, as the share of stablecoins relative to the total cryptocurrency market fell from 10% to 7%.
At the time of writing, the percentage of stablecoins in the total cryptocurrency market has risen even higher, reaching 17%. According to crypto data provider CoinGecko, the value of all stablecoins is equal to $155 billion, while the total market capitalization stands at $946 billion.
The share of stablecoins has grown in recent weeks despite the total supply of all stablecoins falling massively during the second quarter of 2022, experiencing one of its steepest declines in history. The stablecoin industry has been associated with a lot of FUD due to the failure of algorithmic stablecoins like Terra. Major issuers of cash-backed stablecoins such as Tether have been reassuring their clients that they have not been affected by issues like the Celsius crisis.
The total market capitalization has also plunged this year, falling from more than $2 trillion in January to less than $1 trillion in mid-June.
JPMorgan cryptocurrency strategists are known for taking a positive stance on the long-term price of Bitcoin (BTC).. As previously reported, analysts reiterated in February 2022 that their theoretical long-term target for Bitcoin stood at $150,000.
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