Author: David Canellis, Blockworks; Compilation: Tao Zhu, Golden Finance
As the debate intensifies over whether Saylor is an once-in-a-lifetime financial genius or just another over-leveraged trader, stablecoins are bringing more liquidity to cryptocurrencies.
At least, this is in terms of the raw dollar value injected into the space 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. Most of the cash comes from buyers of zero-interest convertible bonds.
MicroStrategy's purchasing behavior can simply be viewed as one hand accepting dollars while the other exchanges them for Bitcoin. Quick and cheap liquidity in exchange for risk exposure.
During the same period, net inflows into U.S. Bitcoin ETFs increased by $16.5 billion. ETH ETF net inflows increased by $3 billion, represented in blue on the chart.
The ETF follows a process similar to MicroStrategy's, but without bonds. They use investors' cash to purchase an equivalent amount of Bitcoin or Ethereum, transferring risk exposure to shareholders while deducting fees.
Stablecoins, MicroStrategy's Bitcoin purchases, and ETF inflows have converged in November.
Then there are stablecoins. Since mid-October, stablecoin issuers have minted a total of $30.8 billion worth of tokens. Over 92% of the funds have flowed into USDT and USDC.
Apart from Sky's USDS and the already emerging more exotic alternatives (such as Ethena's USDe and Usual's USD0), stablecoin managers typically adopt 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 stablecoin flow is not actually the same as ETF inflows or MSTR's cash pipeline.
But they do represent something similar: a universal impulse to enter the cryptocurrency market through various avenues.
Liquidity over the past nine weeks has approached $68 billion—this is undoubtedly the largest wave of liquidity on record.
