Why do “whales” choose to increase their holdings of stablecoins in large quantities?

Source: Blockchain Knight

On-chain data shows that "whale" entities have purchased around 5% of the supply of major stablecoins in the past three weeks.

According to data from on-chain analytics firm Santiment, “whales” have been rapidly accumulating stablecoin supply recently. “Whales” here refer to investors who hold at least $5 million in Crypto assets.

The chart below shows the supply trends of major stablecoins held by these large holders over the past few months.

The "major" stablecoins here include Tether (USDT), USD Coin (USDC), BUSD (BUSD), Dai (DAI), TrueUSD (TUSD) and Pax Dollar (USDP).

The chart shows that the percentage of supply of these assets held by “whale” entities has risen sharply recently. This shows that these large holders have accumulated more fiat-pegged tokens.

In the same chart, Santiment also included data on the total market capitalization of stablecoins, and it appears that this indicator has also been rising during the same period.

However, the growth in "whale" holdings has been significantly more rapid, which means that newly issued tokens for these assets are not the only source behind the accumulation.

In total, whales have added more than 5% of the total supply of these major stablecoins to their wallets over the past three weeks, which is impressive.

Crypto assets held by "whales" may increase, usually for two reasons.

First of all, there may be new big funds choosing to enter the market through stablecoins. Second, “whales” are dumping the industry’s more volatile assets (such as BTC) in search of the safety of these USD-pegged assets.

The former is always bullish on the industry, implying new capital inflows. However, the latter may initially be bearish. However, investors who choose to invest in stablecoins often do so because they ultimately intend to enter (or re-enter) more volatile areas.

Therefore, the supply of stablecoins can be viewed as capital waiting to be deployed, especially stablecoins held by “whales”.

The recent sharp increase in "whale" holdings may also mean that BTC and other assets are currently accumulating a large amount of potential "ammunition."

Santiment, in reply to a user under the X thread, also pointed out that the recent accumulation of BTC from "whales" has been quite strong.

This means that a bullish combination has formed because the rise in stablecoins is not just due to "whales" reshuffling funds from BTC to stablecoins, but from actual inflows.