❌ Stablecoin market cap is dropping !

This is the first time during this cycle that we are witnessing such a sharp decline in the stablecoin (ERC-20) market cap.

📉 Their total capitalization has fallen by $7B in just one week.

This is a very negative signal, explained by the fact that some investors are choosing to fully exit the crypto market, which continues to correct, while precious metals keep surging and equity markets maintain a strong underlying uptrend.

💡 This likely explains why liquidity is leaving the crypto market in search of returns elsewhere.

To understand the mechanism, when the stablecoin market cap declines, it means there is less demand and less need for them.

Put simply, investors are converting back to fiat to gain exposure elsewhere, and stablecoin protocols burn the excess supply that is no longer required.

Therefore, a declining ERC-20 stablecoin market cap is a bearish signal.

This trend is also being confirmed across other chains.

We can also observe that in 2021, this was a confirmation that BTC was entering a bear market (with the Terra Luna effect also playing a role, it must be said).

👉 This situation needs to improve quickly for the move to remain cyclical rather than structural.

In the meantime, it further weakens an already highly constrained liquidity environment in the crypto market.