In the past couple of days, I’ve seen people use the curve of stablecoin supply to match up with ETF net inflows, saying, “Since the money is coming in from off-exchange, it must go up.” To put it plainly, correlation doesn’t mean causation. The issuance of stablecoins could also be driven by market making, cross-exchange arbitrage, or even on-chain collateral swaps used for revolving liquidity—so the money doesn’t necessarily end up in spot buy orders. In fact, ETFs are more like a “compliance channel,” but once the channel is open, it doesn’t mean every single flow rushes in the same direction. Inside, there’s also hedging and rebalancing, and the timing could be completely different from what’s happening on-chain. Anyway, I’d rather look at how funds migrate between different chains and L2s, and whether DA usage is keeping up, than stare at two lines rising together and start filling in a story.

By the way, the whole debate over the compliance boundaries around privacy coins/mixing coins is pretty divisive. I feel that in the short term, the “off-exchange → on-chain” segment will become even more sensitive; the more sensitive it is, the easier it is for people to over-interpret it. That’s all for now.