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Bitcoin price holds, while USDT increases its stablecoins dominance: Fineqia

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Matteo Greco, Research Analyst at Fineqia International, writes that bitcoin (BTC) closed last week at about USD26,750, a 0.5 per cent decrease in price compared with the previous week. The seven-day moving average of active addresses on the Bitcoin network dropped to 754.52k, the lowest since July 2021. The impact of BRC-20, tokens that confirm transactions on the BTC blockchain, remained strong. BRC-20 tokens are responsible for 26 per cent of BTC network transaction fees.

BTC activity recently surged due to the growing use of ordinal inscriptions, which are used to create BRC-20 tokens that can be deployed on BTC blockchain following the Taproot upgrade and have seen a rise in activity since mid- April.

On a year-to-date basis, bitcoin spot volume increased in emerging markets and Japan, while a decrease had been recorded in the European, United Kingdom and US markets. BTC supply stored on exchanges dropped below 12 per cent for the second time during 2023, still showing fear among investors amid multiple bankruptcies that affected crypto businesses and banks.

USDC, the stablecoin issued by Circle, witnessed a negative trend, after it was hit by a contagion of US banks, as supply shrank from 47 billion to less than 30 billion in just over 60 days. Issues related to other major stablecoins worked in favour of Tether, the firm behind the USDT stablecoin. It announced a record net profit of USD1.48 billion in Q1 and currently shows a 64 per cent dominance in the stablecoins market cap.

Starting this month, Tether will regularly allocate up to 15 per cent of its net realised operating profits towards purchasing bitcoin (BTC). Tether also claims to have drastically reduced its liquid component in banks from USD5.3 billion to USD483 million in Q1 2023, to avoid exposure to possible further bank contagion.

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