Crypto liquidity appears to be recovering, an analyst at New York-based financial services and investment management firm Morgan Stanley detailed Monday. In a note to investors, Morgan Stanley’s Sheena Shah highlighted that the stablecoin market cap saw its first drop in redemptions since April.
Morgan Stanley Investor Report Says Crypto Winter May Be Thawing, But Releveraging Need Still Absent
According to a recent analysis by Morgan Stanley’s cryptocurrency research unit, the crypto winter could start to warm as institutional investors stop redeeming the top two stablecoins in the crypto economy Led by Hina Shah. The U.K.-based analyst further said that demand from investors looking for leverage is also falling. Shah detailed that there is a huge gap in decentralized finance (defi) lending.
“There doesn’t seem to be a huge need to repurpose the cryptocurrency world right now,” Shah Comment in an investor report released Monday. Morgan Stanley’s chief cryptocurrency analyst added: “If fiat leverage doesn’t grow or crypto leverage doesn’t grow, it’s going to be hard for this crypto cycle to bottom out.”
Morgan Stanley’s Sha explained that the overall stablecoin market was valued last week and is currently valued at $153.26 billion, for the first time since April 2022, there has been no decline in value. Morgan Stanley analysts said “extreme institutional deleveraging” was temporarily on hold for a while. Current market data shows that Tether (USDT) has gained 2.6% in market cap over the past 30 days, while USD Coin (USDC) has lost 4.6% in market cap.
Morgan Stanley cryptocurrency researchers noted the slump in USDC market valuations, further noting that it started in the first week of July. “The drop in USDC’s market cap started before the regulatory change and looks similar to the drop earlier this year between March and May,” Shah explained in a note to investors.
September is traditionally a bad month for cryptocurrencies, but some think consolidation could change 4-year trend
cryptocurrency eBy Monday afternoon (EST), the market capitalization had fallen from $1.18 trillion to $1.06 trillion, and the economy suffered some losses this weekend. The crypto economy is expected to be lower in September, as this month has traditionally been a bad month in terms of crypto market history. On August 21, the Twitter account called Bleeding encryption Discussed that September was negative for cryptocurrencies for the fourth year in a row.
“Every year we see how bad September was for cryptocurrencies, but you want to believe ‘this time is different’ – you can choose to bury your head in the sand, I’d choose to listen to the market,” Bleeding Crypto tweet. Despite the lower value of cryptocurrency prices, market participants do believe that this September may be different.
This is because The Merge is expected to take place on September 15, and it is assumed that the value of Ethereum (ETH) may soar as a by-product with the rest of the crypto-economy.However, The Merge is likely to be already priced As ETH made significant gains last month while boosting the crypto economy.
What do you think of the Morgan Stanley analyst’s note on crypto liquidity and stablecoin redemption reductions? Let us know what you think about this topic in the comments section below.
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