The launch of PYUSD, a new stablecoin by PayPal, is the most exciting event of this month. Is this a start of wider institutional adoption in the space? Given stablecoins enable an investor to keep dormant cash within the system or to use it as a medium of transaction, their importance and value have grown multi-fold over the years. Governments hate them and are floating ideas of their own CBDCs as an alternative. This and other trends to watch out for are below.
1. PayPal wants a share of the pie
On August 7, PayPal, a major payments platform, launched a stable coin (PYUSD) that is pegged to the US dollar. PYUSD is supported by short-term treasuries, dollar deposits, and cash equivalents, as detailed in the company's announcement, and will be minted on the Ethereum network as an ERC-20 token. Starting in September, Paxos, a blockchain-based payments company, will publish monthly reports detailing the reserves backing PYUSD. PYUSD has already reached 26 million in supply – though it pales in comparison to the ~$110 billion combined market cap of Tether USD and USD Coin, the top two stablecoins currently.
2. Uniswap gets deployed on Coinbase’s Layer-2 Network Base
Uniswap v3 has now launched on Coinbase’s L2 Base. Since the launch, Uniswap has already executed more than 13,770 transactions and around $8.2 million in trading volume. The Base network, an L2 blockchain recently launched to the public, has had almost $140 million bridged and generated over $1.6 million in fees.
With this launch, both Uniswap and SushiSwap, the two main DEXs on Ethereum, are now available on Base, giving US investors more platforms to trade assets. Coinbase, which is fighting the US SEC on listing certain crypto assets termed as securities, continues to be bullish about the space.
3. Global stocks are on the brink of a downturn
Global stocks are experiencing a downturn due to concerns about the financial system and economy, influenced by recent developments in China, Italy, and the US. Moody’s has downgraded 10 smaller US banks and hinted at potential downgrades for some major institutions. This comes as Italy introduced a new tax that has wiped €9.3 billion from its banks’ valuation. Meanwhile, disappointing trade data from China has led to a drop in copper prices. Seasonally, September isn’t a great month for stocks or crypto.
Source: Bloomberg
4. Long-term BTC holders are accumulating
Long-term Bitcoin holders, defined as addresses that have held coins for at least 155 days, now control a record 75% of BTC’s circulating supply. Data from Glassnode indicates that the balance in these long-term wallets has increased by 62,882 BTC, reaching a new high of 14.52 million BTC. This surpasses the previous peak of 14.48 million BTC recorded in May this year. This suggests an ongoing accumulation phase in the market.
Source: Glassnode
5. BTC volatility is reaching its low
Volatility is determined by the fluctuation in Bitcoin's price relative to its average price. Bitcoin's volatility has now reached its trendline lows, like March 2020. This low volatility is typically seen in post-bear-market hangover periods which are ideally good re-accumulation phases.
Source: Glassnode
6. MVRV Z-Score suggests another dip incoming
MVRV Z-Score uses blockchain analysis to identify periods where Bitcoin is extremely over or undervalued relative to its fair market value. Peaks in the Z-score, especially when entering the pink zone, often indicate a top in market cycles. Conversely, when the Z-score ventures into the green zone, it suggests a prime buying opportunity.
According to the metric, BTC has moved away from the green zone this year but is dipping back directionally. If we revisit the green zone, we can be sure to load up. Till then, cost averaging regularly at these levels will serve us well.
Source: look into bitcoin
