Crypto sectors like stablecoins have started to reflect similar positive trends in their total supply. 🚀 intotheblock analyzes the recent increase in liquidity & its relation with crypto asset’s price performance and increase in stablecoin supply.
. As inflation starts to decrease, markets have generally climbed in anticipation of a possible change in the Federal Reserve's policy. Even though the Federal Reserve has not yet officially announced any plans to loosen financial conditions, investors may be anticipating such a move, as they have observed that increasing the money supply leads to an increase in the value of financial assets in the past.
The relationship between the Fed's actions on liquidity and the market's movements can be directly correlated. Bitcoin even sometimes behaving as an indicator for changes in liquidity. This pattern is noticeable during May and November 2021, which turned out to be local tops during Fed’s positive guidance.
The increased liquidity in the market has started to impact the supply available of stablecoins in the ecosystem. This growth represents a positive sign for the entire crypto ecosystem.The growth of stablecoin supply can be beneficial for the crypto ecosystem in a few ways: it can increase liquidity, make trading more accessible, foment greater adoption, improve market stability and increase the efficiency of the ecosystem overall.
The relevance of monetary policy and macroeconomic decisions has continued to play an important role in crypto assets price performance. Jerome Powell aims to keep taking the necessary measures in order to bring inflation under control. These monetary policy actions affect the crypto and capital markets through their impact on liquidity.
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