Much attention has been paid to the phenomenon of users exiting the cryptocurrency market in the wake of the market crash that followed the breakdown of the Terraform ecosystem and the consequent insolvency of a few crypto brokers and lenders.
However, research reveals that crypto users have not abandoned the market due to the volatility but are instead diversifying their holdings, according to findings from Mercuryo crypto wallet shared with Finbold on July 20.
Mercuryo notes:
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“Despite average balances of BTC in wallets having fallen by almost 30% since the outset of 2022, the balance of stablecoins has actually increased, and in fact, average USDT holdings are up +40%.”
The cryptocurrency wallet and business payments platform opines that this could be an indication that retail investors are showing some resiliency despite the volatility that is currently present in the market.
CEO of Mercuryo, Petr Kozyakov, said:
“This is clear evidence that crypto holders are not deserting in droves. Quite the opposite – despite recent volatility, the appetite for crypto remains. There is no doubt that recent events have exposed fundamentally flawed crypto projects and that things need to change to avoid this happening again.”
Investors wait to re-enter the market
As an alternative to withdrawing their funds from the market, many investors have decided to convert some of their cryptocurrency holdings into stablecoins such as USDT in the interim as they wait to re-enter the market.
Kozyakov added:
“This is evident in the growth we’ve seen in the growth in balance of stablecoins among our users. This indicates faith that long term, consumers believe the market will recover, and go on to flourish.”
Moreover, according to Mercuryo’s consumer research, 35% of UK residents own cryptocurrency, and 52% say they aim to do so soon.
Ultimately, Kozyakov stresses that for more investors such as those in the UK who plan to own digital assets, education and regulation are essential to the widespread usage of cryptocurrencies.
The CEO also emphasized crypto businesses should find real-world applications “to ensure they remain attractive.”
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