Digital assets are still operating as risky assets, falling alongside rising interest rates around the world according to a recent report from Bank of America (BAC), CoinDesk reported. However, there are some tentative signs of recovery, including a growing influx of stablecoins.
Stablecoins inflow hits $490 million
Stablecoins are a subcategory of cryptocurrencies whose value is pegged to the US dollar, gold, or another “hard” asset. Their inflow reached $490 million last week, up 58% from the previous week according to the BAC report, which stated:
Four largest stablecoins with consistent net inflows
The four largest stablecoins by market capitalization – Tether, Binance USD, USD Coin and Dai – saw net trade inflows for the third consecutive week, the report said, highlighting that top inflows of Binance USD (BUSD) and USD Coin (USDC) outflows were most likely the result of investors “preemptively rotating” from the latter to the former.
This was to avoid disruption after Binance decided to automatically convert some stablecoins to Binance USD.
Bank of America predicts that legislative clarity will support DeFi adoption.
Going to POS didn’t help
Ether saw gradual growth from mid-July to mid-August, but is now reversing the gains as it appears that Ethereum Mainnet’s transition to proof-of-stake (PoS) is not solving high fees or scalability issues.
Investors are becoming more wary, taking a “wait-and-see” approach to potential upgrades, CoinDesk wrote.
It’s probably best to wait and see it both ways, as this transition, called the merge, is only the first of five planned upgrades to the Ethereum mainnet. It involved adopting a more environmentally friendly proof-of-stake consensus mechanism.