- Signs of digital asset recovery include increasing inflow of stablecoins
- Four biggest stablecoins by market cap have seen exchange net inflows for the third consecutive week
Digital assets still function as risk assets, dropping in parallel to rising interest rates worldwide according to a recent report by Bank of America (BAC), CoinDesk reported. However, there are some tentative signs of recovery, which include increasing inflow of stablecoins.
Stablecoin inflow reaches $490m
Stablecoins are a subcategory of cryptocurrencies whose value is pegged to the US dollar, gold, or another “hard” asset. Their inflow reached $490 million last week, up 58% from the previous week according to the BAC report, which stated:
Real world use cases like payments/remittances are adopted and real-world data providers like decentralized oracle networks increase functionality.
Four biggest stablecoins with consistent net inflows
The four biggest stablecoins by market cap – Tether, Binance USD, USD Coin, and Dai – have seen exchange net inflows for the third consecutive week, the report stated, pointing out that major Binance USD (BUSD) inflows and USD Coin (USDC) outflows were most likely the outcome of investors “preventively rotating” from the latter into the former.
This was in order to prevent disruptions after Binance decided to convert some stablecoins into Binance USD automatically.
The Bank of America anticipates that legislative clarity will support adoption of DeFi.
Switch to PoS didn’t help
Ether enjoyed gradual growth from mid-July to mid-August, but is now reversing gains as it emerges the Ethereum Mainnet’s transition to proof-of-stake (PoS) does not fix high fees or scalability concerns.
Investors are becoming warier, adopting a “wait-and-see” approach to potential upgrades, CoinDesk wrote.
It’s probably best to wait and see either way because this transition, called the Merge, is only the first of five planned upgrades of the Ethereum Mainnet. It involved adoption of a proof-of-stake consensus mechanism, which is environmentally friendlier.