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The latest on-chain data shows that the stablecoin market is approaching a new milestone in terms of valuation. Here's how rising liquidity could impact bitcoin and the overall cryptocurrency market.
Can Stablecoin Limit Increasing Push bitcoin Price To $100,000?
The IntoTheBlock market intelligence platform has revealed in its weekly report that the market capitalization of stablecoins has seen notable growth in the last month. According to the crypto company, the market capitalization of stablecoins surpassed $190 billion this week for the first time since late April 2022, when the price of bitcoin hovered around the $40,000 mark.
This impressive growth is thanks to bitcoin's unprecedented run to a six-figure valuation and the explosion of total market capitalization to over $3.4 trillion. IntoTheBlock noted that stablecoins have seen increased adoption in recent weeks, as investors continue to rush towards riskier assets like cryptocurrencies.
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Specifically, this expansion has been primarily in favor of Tether's USDT, which continues to completely dominate the stablecoin market. Data from IntoTheBlock shows that USDT holds around 72% of the market share, with a market capitalization of over $133 billion, reminiscent of the cryptocurrency market highs of 2021.
Interestingly, demand for the Tether stablecoin appears to be increasing, with over $3 billion in new USDT tokens being minted weekly. Notably, more than $13 billion has been minted since the beginning of November, with stablecoins largely flowing onto centralized exchanges.
This injection of new liquidity into centralized exchanges has been reflected in the market, especially with the strong bullish momentum seen in recent weeks. Historically, increasing stablecoin inflows to exchanges are positively correlated with market prices, as they often represent greater “purchasing power” for investors.
As such, the continuation of this positive trend could be critical to the dream of bitcoin price surpassing $100,000. While the flagship cryptocurrency has seemingly recovered from its recent drop below the $93,000 level, it hasn't exactly shown enough strength to surpass the six-figure milestone.
At the time of writing, the price of bitcoin continues to hover around the $96,500 mark, reflecting an increase of over 2% in the last 24 hours. According to data from CoinGecko, the leading cryptocurrency is still in the red in the weekly period, with a drop of 3% in the last seven days.
btc market becomes stable and mature: IntoTheBlock
IntoTheBlock too <a target="_blank" href="https://www.tradingview.com/chart/BTC_VOLATILITY30/igTQH9e3-bitcoin-s-Volatility-Reflects-a-Maturing-Market/?utm_campaign=Newsletter&utm_medium=email&_hsenc=p2ANqtz–Zg9gX5p5Kwuxt_-P0ZJl5QzRzrdsw6WiZQE_TW1A0_w_6N_o1YN5_XLZ2dKp0xVEP0FiM6utqn9VPy7GVQnLtdAHnlA&_hsmi=336227106&utm_content=336227106&utm_source=hs_email” target=”_blank”>revealed in its weekly report that the bitcoin market climate appears to be maturing, as volatility is currently trending downward. According to the blockchain platform, high market volatility has been a long-standing point of criticism for btc as a store of value.
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However, IntoTheBlock noted that investors can expect bitcoin's price performance to be more stable, as retail and institutional adoption increases and volatility decreases. Therefore, the leading cryptocurrency could become an even more reliable store of value.
Featured image from iStock, chart from TradingView
