Large funds are not yet ready to take on risks

How do we know?
By observing the indicator of circulating stablecoin supply

What are interest-bearing stablecoins?
Interest-bearing stablecoins are dollar-denominated stablecoins that automatically generate returns for holders.

What does this indicator reveal?
Where the funds flow when investors are unwilling to take risks but still want to earn returns

If the “purple area” (total supply of interest-bearing stablecoins) grows rapidly, it indicates that large “smart money” is withdrawing from volatile assets like BTC and altcoins but has not exited into fiat currency, instead staying on-chain, waiting for a better buying opportunity; or, the market is experiencing a large inflow of new funds, but these funds are not directly entering BTC/altcoins, rather entering through interest-bearing dollar assets.

The “white area” represents the BUIDL (BlackRock USD Institutional Digital Liquidity Fund). During recent BTC declines, the supply of this tool has sharply decreased, indicating funds are being redeemed/withdrawn.

Why is this important?
To trigger a new bull market in the crypto space, we need to see:
1) New funds flowing in, with BUIDL (white area) supply increasing. This usually happens 1-2 months before a bull market begins.
2) While the “purple area” decreases, the white area rises. This signals that market liquidity is shifting from interest-bearing stablecoins to risk assets, and the inflow through BUIDL indicates that new large “smart money” is increasingly interested in crypto investments. In other words, large “smart money” is prepared to take on risks.

Current conclusion
At present, it cannot be confirmed that a new mid-term bull market in crypto is imminent. Large funds are not yet ready to take on risks. This means that even if the market rises in the short term, smart money may see it as an opportunity to reduce risks and sell off crypto assets.

Therefore, we should wait for a “bullish signal” before actively investing in BTC and altcoins, and remain rational about short-term upward trends, avoiding blind optimism.