Stablecoin Liquidity Rises As Crypto Assets Withstand Pressure Amid Conflicts

As international tensions increase, many users continue to try to find cross-border liquidity, increasing the availability of stablecoins.

The broader financial market is under pressure due to rising tensions stemming from the ongoing Middle East crisis. However, crypto assets are reversing and resisting pressure.

In fact, a recent report from Asian crypto trading firm, QCP Capital, revealed that stablecoins are rising despite prices and gold collapsing under pressure. This is a sign that the crypto market is reeling from the chaos caused by the country’s tensions.

Crypto Withstands Stress From War Situations

According to the latest report of QCP Market Color, cryptocurrencies are retreating and not allowing the battle to gain price movement in what analysts call “the twist of the last quarter.” Both bitcoin (BTC) and ether (ETH) trade in the green on daily and weekly periods. At the time of writing, BTC was moving above $73,550, while ETH changed hands at around $2,250.

Bitcoin’s safe-haven and geopolitical-hedge narrative is reemerging, with market volatility testing the thesis in real time. Stocks, meanwhile, are testing key support levels amid oil volatility and political tensions. This shows the separation between crypto, equity, and gold.

It’s worth noting that crypto has decoupled from gold and equities to the upside before; this happened at the beginning of the Russian-Ukrainian war in 2022. Although the installation of the Terra-Luna ecosystem and the fall of FTX returned bitcoin’s upward momentum, the asset rose from $ 35,000 to $ 48,000 during the month. Analysts say the same pattern may play out this time, however, without the same level of systemic shock due to industry maturity.

Stablecoin and Institutional Liquidity Rise

As the country’s tensions increase, many users continue to try to access cross-border money and money flows. This is reflected in the USD Coin (USDC) supply reaching a record $81.1 billion. The increase in stablecoin supply indicates the influx of new liquidity into the crypto market.

Additionally, institutional money is on the rise, as Bitcoin exchange-traded funds (ETFs) posted five consecutive days of inflows. BlackRock’s product alone recorded three consecutive weeks of revenue of $1.75 billion. Bitcoin treasury firms like Michael Saylor’s Strategy are steadily growing their BTC holdings, regardless of market conditions.

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In the meantime, BTC is facing a challenge at $74,500, as a large group of short terminations remain above that level. As spot options approach the big open profit strike at the end of the month, it remains to be seen whether bitcoin will extend its rally or face a pullback.