Morgan Stanley Analyst Says Crypto Economy’s Liquidity Has Improved, But There’s “No Huge Demand for Re-Leverage” – Reuters


An analyst at New York-based financial services and investment management firm Morgan Stanley detailed on Monday that crypto liquidity appears to be recovering. Morgan Stanley’s Sheena Shah pointed out in a note to investors that the market capitalization of stablecoins is seeing fewer redemptions for the first time since April.

Morgan Stanley Investor Note Says Crypto Winter May Be Unfreezing, But Demand for Re-Leverage Still Lacks

The crypto winter could start to heat up as institutional investors halted redemptions of the crypto economy’s two main stablecoins, according to a recent analysis authored by Morgan Stanley’s Cryptocurrency Research. lead Sheena Shah. The UK-based analyst further said that demand has also fallen among investors looking for leverage. There has been a huge shortfall in decentralized finance (defi) loans Shah detailed.

“There doesn’t seem to be a huge demand for reuse in the crypto world right now,” Shah noticed in the note to investors published on Monday. “It will be difficult for this crypto cycle to bottom out without fiat leverage increasing or crypto leverage increasing,” the senior cryptocurrency analyst at Morgan Stanley added.

Morgan Stanley Analyst Says Crypto Economy's Liquidity Has Improved, But There's 'No Huge Demand to Retap'
BTC/USDT hourly chart on August 22, 2022 at 12:35 p.m. (EST) Monday afternoon.

Morgan Stanley’s Sha explained that last week the overall stablecoin market valuation, which is currently valued at $153.26 billion, did not fall in value for the first time since April 2022. The Morgan Stanley analyst said “extreme institutional deleveraging” has taken a brief pause for now. Current market data shows that over the past 30 days, the market capitalization of tether (USDT) has increased by 2.6%, while the usd coin (USDC) has fallen by 4.6%.

The Morgan Stanley crypto researcher noticed the decline in USDC market valuation and further noted that it started in the first week of July. “USDC’s market capitalization plunge began before the regulatory change and resembles the drop seen earlier in the year between March and May,” Shah said. Remark to investors explains.

September is traditionally a sour month for crypto, but some believe the meltdown could change the 4-year trend

The crypto eThe economy suffered losses over the weekend as the value fell from $1.18 trillion to $1.06 trillion on Monday afternoon (EST). People are expecting the crypto economy to crash even more in September as the month is traditionally a bad month in terms of crypto market history. On August 21, the Twitter account called bleeding crypto discussed how September has been sour for crypto for the past four years in a row.

“Every year we see how bad September is for crypto, but you want to believe ‘this time it’s different’ – you can choose to put your head in the sand, I’ll choose to listen to the market “, Bleeding Crypto tweeted. Despite the drop in crypto prices, market participants believe that this September could be different.

Morgan Stanley Analyst Says Crypto Economy's Liquidity Has Improved, But There's 'No Huge Demand to Retap'
September bitcoin charts shared by the Bleeding Crypto Twitter account on August 21, 2022.

It’s because Fusion is expected to take place on September 15, and it is assumed that ethereum (ETH) can skyrocket in value with the rest of the crypto economy as a byproduct. However, it is quite possible that the merger is already priced as ETH recorded significant gains last month, which at the same time strengthened the crypto economy.

Keywords in this story

Bleeding Crypto, crypto-economy, crypto-liquidity, crypto stocks, Ethereum, Ethereum (ETH), extreme institutional deleveraging, institutional investors, leverage, morgan stanley, Morgan Stanley analyst, re-leverage, September, Crypto from September, September Markets, Stablecoins, Tether, The Merger, usd coin, usdc, usdc market valuation, usdt

What do you think of the Morgan Stanley analyst’s note on crypto liquidity and fewer stablecoin redemptions? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the news manager for News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for News about disruptive protocols emerging today.

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