Author: David Canellis, Blockworks; Compilation: Tao Zhu, Jinse Finance
As the debate over whether Saylor is a once-in-a-lifetime financial genius or just another over-leveraged trader intensifies, stablecoins are bringing more liquidity to cryptocurrency.
At least, this is in terms of the original dollar value injected into the sector so far.
In just the past two months, MSTR has spent $17.5 billion on Bitcoin, as shown in the orange area of the chart below. Most of the cash came from buyers of zero-interest convertible bonds.
MicroStrategy's purchasing behavior can simply be seen as one hand accepting dollars while the other hand exchanges them for Bitcoin. Quick and cheap liquidity in exchange for risk exposure.
During the same period, net inflows into Bitcoin ETFs in the U.S. increased by $16.5 billion. ETH ETFs saw a net increase of $3 billion, with these flows represented in blue on the chart.
The ETF follows a process similar to MicroStrategy but without bonds. They use investors' cash to purchase an equivalent amount of Bitcoin or Ethereum, transferring the risk exposure to shareholders and deducting fees.
Stablecoins, MicroStrategy's Bitcoin purchasing volume, and ETF inflows have aligned in November.
Then there are stablecoins. Since mid-October, stablecoin issuers have minted a total of $30.8 billion in tokens. Over 92% of the funds flowed into USDT and USDC.
Besides Sky's USDS and the more unusual alternatives that have emerged (like Ethena's USDe and Usual's USD0), stablecoin managers typically take dollars, purchase short-term government bonds and other cash equivalents, and then issue an equivalent amount of new tokens to anyone wiring them cash.
Clearly, the flow of stablecoins is not actually the same as ETF inflows or MSTR's cash pipeline.
But they do represent something similar: a collective impulse to enter the cryptocurrency market through various channels.
Liquidity over the past nine weeks has approached $68 billion—this is undoubtedly the largest liquidity wave on record.
