Stablecoin Market Capitalization Nears $200 Billion — Bitcoin Price To Resume Rally?

The latest on-chain data shows that the stablecoin market is nearing a new milestone in terms of valuation. Here’s how the increasing liquidity could impact Bitcoin and the general cryptocurrency market.

Can The Increasing Stablecoin Cap Push Bitcoin Price To $100,000?

Market intelligence platform IntoTheBlock has revealed in its weekly report that the stablecoin market capitalization has experienced notable growth in the past month. According to the crypto firm, the stablecoin market cap surged past $190 billion this week for the first time since late April 2022 when Bitcoin price was hovering around the $40,000 mark.

This impressive growth comes on the back of Bitcoin’s unprecedented run to a six-figure valuation and the explosion of the total market capitalization to over $3.4 trillion. IntoTheBlock noted that stablecoins have seen increased adoption in the past few weeks, as investors continue to run toward riskier assets like cryptocurrencies.

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Specifically, this expansion has primarily been in favor of Tether’s USDT, which continues to completely dominate the stablecoin market. Data from IntoTheBlock shows that USDT holds about 72% of the market share, with a market capitalization of over $133 billion — reminiscent of the crypto market highs of 2021.

Interestingly, the demand for the Tether stablecoin appears to be climbing, with a weekly mint of over $3 billion of new USDT tokens. Most notably, over $13 billion USDT has been minted since the start of November, with the stablecoins largely flowing toward centralized exchanges.

This injection of fresh liquidity into centralized exchanges has been reflected in the market, especially with the strong bullish momentum witnessed in the past few weeks. Historically, increasing stablecoin inflows into exchanges is positively correlated with market prices, as they often represent higher “buying power”  for the investors.

As such, the continuation of this positive trend could be pivotal to the dream of Bitcoin price surpassing $100,000. While the flagship cryptocurrency has seemingly recovered from its recent slump beneath the $93,000 level, it has not exactly shown strength sufficient to surpass the six-figure milestone.

As of this writing, the price of Bitcoin continues to hover around the $96,500 mark, reflecting a more than 2% increase in the last 24 hours. According to data from CoinGecko, the premier cryptocurrency is still in the red on the weekly timeframe, with a 3% decline in the past seven days.

BTC Market Becoming Stable And Mature: IntoTheBlock

IntoTheBlock also disclosed in its weekly report that Bitcoin’s market climate seems to be maturing, as volatility is currently trending downwards. According to the blockchain platform, the market’s high volatility has been a long-standing criticism point for BTC as a store of value.

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However, IntoTheBlock noted that investors can expect the Bitcoin price performance to be more stable, as retail and institutional adoption increases and volatility diminishes. Hence, the premier cryptocurrency could become an even more reliable store of value.

Featured image from iStock, chart from TradingView