Since the collapse of "1011", Tether and Circle have jointly issued 7 billion USD stablecoins. Are institutions preparing ammunition for the bull run?

After the market crash on October 11, Tether (USDT) and Circle (USDC), the two major stablecoin issuers, jointly issued an additional $7 billion in stablecoins to meet the surge in liquidity demand and stabilize market conditions. Among them, Tether minted an extra $1 billion USDT in just eight hours, indicating that institutional investors are preparing for high volume activity and market recovery, showing confidence in the rebound prospects of crypto assets. However, the International Monetary Fund (IMF) has issued a warning, pointing out that excessive reliance on stablecoins could pose systemic risks to the global financial market.

Liquidity Infusion After Market Crash: Quick Response from Stablecoin Giants

After the market experienced a significant correction, the large-scale issuance actions by Tether and Circle were seen as a positive reinforcement of market resilience, meeting the immediate demand for stable assets from institutional clients.

· $7 billion liquidity injection: After the market crash on October 11, Tether and Circle minted a total of $7 billion in stablecoins to boost liquidity in the post-crash period.

· Tether's swift action: Tether minted 1 billion USD in USDT within just eight hours, indicating a sharp rise in market demand for stable assets. This action follows a larger-scale issuance of 7 billion USD, demonstrating that Tether is actively enhancing the market's resilience under volatile conditions.

· Meeting institutional demand: Tether typically mints a large amount of USDT to meet the immediate needs of institutional clients. This latest minting follows the pattern of stabilizing the ecosystem after significant downturns.

· Signals of confidence in market recovery: Tether's actions indicate its confidence in the rebound of the crypto market and hint at accumulating capital in anticipation of a surge in trading, which could bring potential price volatility opportunities.

Circle's Strategic Participation and the Transformation of Stablecoin Usage

Circle assists market stability by increasing the issuance of USDC, which aligns with the strategy of institutional investors maintaining dollar exposure during uncertain times and reflects the expansion of stablecoin usage.

· Circle boosts market stability: Circle plays an important role in the $7 billion liquidity injection by minting additional USDC, helping to normalize inter-platform liquidity. On-chain data confirms a significant increase in its circulating supply.

· Institutional hedging and re-entry strategies: During uncertain times, institutional participants often exchange capital for USDC to maintain dollar exposure, allowing funds to act quickly when re-entering the volatile crypto market. Circle's increase in supply seems to align with this strategy.

· Increased preference for USDC: This issuance supports the trend of using the stablecoin for hedging, strategic purchases, and exchange liquidity after the crash. Due to the transparency of USDC and its regulatory connections to the US financial ecosystem, traders' preference for it is increasing.

· The purpose is shifting from speculation to practicality: Konstantin Vasilenko, co-founder of Paybis, stated that stablecoins are transitioning the use of Crypto Assets from speculation to practical utility. He referred to stablecoins as “more or less digital cash now,” emphasizing that businesses are using stablecoins for transaction settlements globally, with its volume approaching payment volume.

IMF's Systemic Risk Warning and Global Regulatory Tightening Trends

Despite the increasing utility of stablecoins, warnings from the International Monetary Fund (IMF) and traditional financial institutions highlight the growing regulatory challenges and potential risks of stablecoins in the global financial system.

· IMF's concerns about systemic risk: The IMF recently warned that over-reliance on stablecoins could pose systemic risks, and a loss of confidence in stablecoins could impact bank deposits and the bond market. The incident of Ethena briefly losing its peg during the crash was cited by the IMF as a warning sign.

· Challenge to central bank control: The IMF is concerned that stablecoins may limit central banks' control over inflation and liquidity and could compete with national currencies.

· Threat of capital flight from emerging markets: Standard Chartered Bank estimates that in the next three years, the application of stablecoins could lead to a loss of $1 trillion in capital from banks in emerging markets, posing a threat to the traditional banking functions in areas with high inflation. The bank specifically mentioned countries such as Egypt, Pakistan, and Bangladesh.

· GENIUS Act and Regulatory Outlook: Although the GENIUS Act in the United States currently prohibits stablecoins from providing yields, users in emerging markets still prefer the stability and liquidity of stablecoins over the uncertain local banking systems. With the acceleration of global adoption, regulators plan to strengthen oversight.

Conclusion

Tether and Circle jointly issued 7 billion USD stablecoins, which is a key action for the crypto market to rebound after severe fluctuations. It not only meets the urgent liquidity needs of institutions, but also sends a signal that market confidence is being rebuilt. However, as stablecoins increasingly integrate into the global financial ecosystem, becoming an important tool for digital cash and capital preservation in emerging markets, international organizations and regulatory bodies are also raising their concerns about the potential systemic risks associated with them. In the future, the development of the stablecoin market will heavily rely on the clarification of regulatory frameworks to balance its innovation potential with the risks to global financial stability.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The crypto market is highly volatile, and investors should make decisions with caution.