Research: USDT, USDC exchange balance going in opposite directions
Often an overlooked part of the cryptocurrency market, stablecoins can be used to determine the current state of the market.
The post Research: USDT,…
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Often an overlooked part of the cryptocurrency market, stablecoins can be used to determine the current state of the market. Stablecoin balance on exchanges represents “dry powder,” or idle liquidity that can become a strong driving force in the market.
The total stablecoin balance on exchanges has only recently become a significant factor in the market. The amount of stablecoins on exchanges remained relatively flat until 2020, with outflows roughly equalling inflows.
However, following the 2020 COVID-19 pandemic, the market saw exponential growth in stablecoin balances on exchanges. According to data from Glassnode analyzed by CryptoSlate, the slight growth of 2020 turned into a parabolic rise at the beginning of 2021.
The two main driving forces behind this growth were USD Coin and USDT.
Circle’s USD Coin stood out among most other stablecoins most likely to take the reign from Tether’s USDT. It reached its peak in February 2022 with over $7 billion USDC sitting on exchanges. It came surprisingly close to USDT and its exchange balance of around $10 billion.
However, USDC failed to maintain its growth. Since February 2022, the stablecoin has seen its balance on exchanges drop continually and is now reaching the level it recorded at the beginning of 2021 — $2.1 billion.
USDC’s diminishing presence on exchanges stands in sharp contrast to USDT. Tether’s stablecoin powerhouse has seen its balance on exchanges double in 2022 and now stands at around $17.7 billion.
The divergence between USDC and USDT balances could become even more significant as the quarter progresses. As previously covered by CryptoSlate, USDC leaving Binance reached its yearly high at the beginning of September. In the first week of September, around $1 billion left Binance’s USDC hot wallets per day.
While this has been in line with the broader industry trend, USDC had topped the charts when it came to outflows. One of the factors that contributed to its massive outflows was Binance’s decision to stop supporting USDC. The exchange said it would convert customers’ holdings in USDC, USDP, and TUSD into its native BUSD stablecoin to enhance liquidity and capital efficiency.
Binance is the largest cryptocurrency exchange by trading volume and the largest exchange by USDC balance. Removing support for USDC landed a heavy blow to the stablecoin.
Another significant factor that further deepened the divergence between USDC and USDT was Tether’s recent commitment to transparency. The company was widely criticized for avoiding auditing its cash reserves and confirming its claims that USDT was backed with fiat currency reserves.
Initiated by Paolo Ardoino, Tether’s CTO, the company has recently ramped up its efforts to present a transparent insight into its reserves, publishing daily values of its fiat currency and gold reserves.
The post Research: USDT, USDC exchange balance going in opposite directions appeared first on CryptoSlate.
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The New York Fed DSGE Model Forecast— September 2023
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE)…
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This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since June 2023. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.
The New York Fed model forecasts use data released through 2023:Q2, augmented for 2023:Q3 with the median forecasts for real GDP growth and core PCE inflation from the Survey of Professional Forecasters (SPF), as well as the yields on ten-year Treasury securities and Baa-rated corporate bonds based on 2023:Q3 averages up to August 30. Moreover, starting in 2021:Q4, the expected federal funds rate between one and six quarters into the future is restricted to equal the corresponding median point forecast from the latest available Survey of Primary Dealers (SPD) in the corresponding quarter. The current projection can be found here.
The change in the forecast relative to June reflects the fact that the economy remains resilient in spite of the increasingly restrictive stance of monetary policy. Output growth is projected to be almost 1 percentage point higher in 2023 than forecasted in June (1.9 versus 1.0 percent) and somewhat higher than June for the rest of the forecast horizon (1.1, 0.7, and 1.2 percent in 2024, 2025, and 2026, versus 0.7, 0.4, and 0.9 in June, respectively). The probability of a not-so-soft recession, as defined by four-quarter GDP growth dipping below -1 percent by the end of 2023, has become negligible at 4.6 percent, down from 26 percent in June. According to the model, much of the resilience in the economy so far stems from the surprising strength in the financial sector, which counteracts the effects of the tightening in monetary policy. Inflation projections are close to what they were in June: 3.7 percent for 2023 (unchanged from the previous forecast), 2.2 percent for 2024 (down from 2.5 percent), and 2.0 percent for both 2025 and 2026 (down from 2.2 and 2.1 percent, respectively). The model still sees inflation returning close to the FOMC’s longer-run goal by the end of next year.
The output gap is projected to be somewhat higher over the forecast horizon than it was in June, consistent with the fact that the surprising strength of the economy is mainly driven by demand factors such as financial shocks, as opposed to supply factors. As in the June forecast, the gap gradually declines from its current positive value to a slightly negative value by 2025. The real natural rate of interest is estimated at 2.5 percent for 2023 (up from 2.2 percent in June), declining to 2.2 percent in 2024, 1.9 percent in 2025, and 1.6 percent in 2026.
Forecast Comparison
| Forecast Period | 2023 | 2024 | 2025 | 2026 | ||||
|---|---|---|---|---|---|---|---|---|
| Date of Forecast | Sep 23 | Jun 23 | Sep 24 | Jun 24 | Sep 25 | Jun 25 | Sep 26 | Jun 26 |
| GDP growth (Q4/Q4) | 1.9 (0.2, 3.6) | 1.0 (-1.9, 4.0) | 1.1 (-4.0, 6.3) | 0.7 (-4.2, 5.7) | 0.7 (-4.4, 5.8) | 0.4 (-4.7, 5.5) | 1.2 (-4.2, 6.6) | 0.9 (-4.5, 6.3) |
| Core PCE inflation (Q4/Q4) | 3.7 (3.4, 3.9) | 3.7 (3.3, 4.2) | 2.2 (1.5, 3.0) | 2.5 (1.6, 3.3) | 2.0 (1.1, 2.9) | 2.2 (1.2, 3.1) | 2.0 (1.0, 3.0) | 2.1 (1.1, 3.2) |
| Real natural rate of interest (Q4) | 2.5 (1.3, 3.7) | 2.2 (1.0, 3.5) | 2.2 (0.8, 3.7) | 1.8 (0.3, 3.2) | 1.9 (0.3, 3.4) | 1.5 (-0.1, 3.0) | 1.6 (-0.0, 3.3) | 1.3 (-0.4, 3.0) |
Notes: This table lists the forecasts of output growth, core PCE inflation, and the real natural rate of interest from the September 2023 and June 2023 forecasts. The numbers outside parentheses are the mean forecasts, and the numbers in parentheses are the 68 percent bands.
Forecasts of Output Growth
Source: Authors’ calculations.
Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.
Forecasts of Inflation
Source: Authors’ calculations.
Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.
Real Natural Rate of Interest
Source: Authors’ calculations.
Notes: The black line shows the model’s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.
Marco Del Negro is an economic research advisor in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Pranay Gundam is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
Donggyu Lee is a research economist in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Ramya Nallamotu is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
Brian Pacula is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
How to cite this post:
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula, “The New York Fed DSGE Model Forecast— September 2023,” Federal Reserve Bank of New York Liberty Street Economics, September 22, 2023, https://libertystreeteconomics.newyorkfed.org/2023/09/the-new-york-fed-dsge-model-forecast-september-2023/.
Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).
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The Big Picture of the housing market, and its almost complete bifurcation, in 3 easy graphs
– by New Deal democratI want to spend some time commenting on the broader issue of why the public perceives that inflation is still rampant, even though…
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- by New Deal democrat
International
Canadian dollar edges higher as retail sales rebound
Canada retail sales climb 2% The Canadian dollar has posted losses on Friday. In the European session, USD/CAD is trading at 1.3446, down 0.28%. Canada’s…
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- Canada retail sales climb 2%
The Canadian dollar has posted losses on Friday. In the European session, USD/CAD is trading at 1.3446, down 0.28%.
Canada’s retail sales jump
Canada’s retail sales rebounded in impressive fashion on Friday. Retail sales in July jumped 2% y/y, following a -0.6% reading in June and beating the 0.5% consensus estimate. On a monthly basis, retail sales rose 0.3%, up from 0.1% in June but shy of the consensus estimate of 0.4%. The good news was tempered by the August estimate, which stands at -0.3% m/m and would be the first decline since March. The Canadian dollar showed little reaction to the retail sales release.
The Bank of Canada doesn’t meet again until October 25th and policy makers will have plenty of data to monitor in the meantime. The BoC has been walking a tightrope that will be familiar to most central banks, that of trying to balance the risks of over and under-tightening. The difficulty in finding the right balance was highlighted in the BoC summary of deliberations of the policy meeting earlier this month.
The BoC decided to hold the benchmark rate at 5.0% after concluding that earlier rate hikes were having an effect and slowing economic growth. The summary indicated that policy makers were concerned that a pause might send the wrong message that rate cuts might be on the way. With inflation still above the BOC’s target, the central bank is not looking at rate cuts and stressed at the September meeting that rate hikes were still on the table and that inflation remained too high.
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USD/CAD Technical
- USD/CAD is testing resistance at 1.3468. The next resistance line is 1.3553
- 1.3408 and 1.3323 are the next support lines
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