The stablecoin market cap, which faced pressure downward pressure after May's multi-billion dollar collapse of TerraUST (UST-USD), has stopped falling on a monthly basis for the first time since April in a sign that crypto liquidity could be starting a path to recovery.The stablecoin market cap, now standing at roughly $153B, is still down 20% from its peak "but this may be a sign that the extreme institutional deleveraging appears to have paused for now," Morgan Stanley analyst Sheena Shah wrote in a recent note to clients. Nevertheless, there seems to be little demand to borrow to finance crypto bets as central banks across the globe continue tightening monetary policy and thus tightening financial conditions."There doesn't seem to be huge demand to re-leverage in the crypto world at this moment," Shah said, noting that decentralized finance platform lending is still off 70% in 2022. "It will be hard for this crypto cycle to bottom without fiat leverage growing or crypto leverage growing."Shah noted that Tether (USDT-USD), the world's largest stablecoin by market cap, has seen redemptions halt and its market issuance rose in the past week, climbing $1.7B in 10 days. By contrast, USD Coin (USDC-USD), the second largest stablecoin, has seen its market cap slide $2.6B since the beginning of July. “The fall in USDC market cap started ahead of the regulatory change and looks similar to the decline seen earlier in the year between...
