Does the minting of new stable coins affect the cryptocurrency market?
Does the minting of new stable coins affect the cryptocurrency market? It seems intuitively that the influence should be. New USDt or other coins are issued, redirected to exchanges and BTC or altcoins are purchased. Let’s check our hypothesis on the data.
I used the https://cryptodollarcap.com/changes service to search for days with the net minting of cryptodollars above 30 million per day.
For example, there were two such days on the screenshot:
I researched the period from the beginning of 2018 to June 17, 2019. In total, it turned out 27 days with high “net” emissions (the number of coins created minus the number of coins burned).
Next, we check the dynamics of BTC prices: on the day of issue, the next day, after 3 days, 5 days and 10 days.
The results were as follows:
In 62.96% of cases on the day of such emissions in the market was an increase.
In 48.15% of cases the next day there was an increase in the market.
In 46.15% of cases in the next 3 days there was an increase in the market.
In 38.46% of cases in the next 5 days there was an increase in the market.
In 40% of cases in the next 10 days there was an increase in the market.
Now let’s see what indicators characterize the entire period on BTC market:
In 52.53% of cases, the day closed with growth.
In 50.84% of cases, 3 days closed with growth.
In 50.09% of cases, 5 days closed with growth.
In 50.09% of cases, 10 days closed with growth.
As we can see, the “medium-term” (next day and the next 3/5/10 days) results of crypto-dollar emission have, rather, a negative impact. For example, in 48.15% of cases a day after an issue we have an increase. In the market in 52.53% of cases day closed with growth. The same is observed in longer time intervals.
An interesting situation is observed only on the day of issue. In almost 63% of cases on such a day the market is growing. This indicator is more than statistical 52.53%.
The study period is mostly bearish on the market. If we bought BTC at the beginning of 2018, and sold on 06/17/2019, we would have suffered a loss of -32.7%. Issuing days give an increase in absolute terms + 9.15%. That means that if we bought BTC only on these days, then our profit would be about 10% compared to a market loss of -32%.
I decided to go ahead and check if this event is an accident or if there is a pattern. From the dataset from 1.01. 2018 to 17.06.2019 generated 500 random sets of 27 days each and looked at the percentage results of these data. This generation models random purchases 27 times during the study period (simulation occurs 500 times). It turned out that in 32% of the outcomes the random purchase turned out to be better than the “emission result” of + 9.15%. Accordingly, in 68% of cases, emission purchases are better than random purchases. In my opinion, this is a rather significant “bend of probability”. Of course, the period is statistically small enough for clear conclusions. The cryptocurrency market is quite young and we have to work with the data that managed to form over the period.
What is the main conclusion I do for myself? The minting of new stable coins has an impact on the market on the day of the emission. Apparently, the redistribution of new crypto-dollars occurs fairly quickly. If we use the crypto-dollar emission parameter in trading strategies, then we need to receive data on new transactions instantly. For these purposes, soon we plan to launch a Telegram bot for alerts. For example, there will be alerts if a new Tether has been minted for more than $ 5 million. Also in the plans of the API, so that the data on the issue could fall into the algorithmic trading bots, where this indicator will be one of the parameters of the trading robot.
In my research I used data from: https://cryptodollarcap.com/changes
Google table with data and calculations: https://docs.google.com/spreadsheets/d/1XnWt1Lm2IUCJWB5eshzSTOA389mzlr6DD18GQRttQQs/edit?usp=sharing
My Telegram Channel: https://t.me/cryptovedinvest