Stablecoin Supply Surges
The supply of the two dominant stablecoins, Tether (USDT) and Circle’s USD Coin (USDC), has seen a remarkable increase of nearly $3 billion within a single week. This surge indicates a heightened investor interest in acquiring cryptocurrencies at lower prices following a significant market downturn earlier this week.
Tether’s Market Capitalization Hits New High
Lookonchain, an on-chain analysis platform, reported that Tether transferred $1.3 billion worth of USDT to exchanges and market makers since the beginning of the week. This recent issuance has propelled USDT’s market capitalization beyond $115 billion, setting a new all-time high.
USD Coin Experiences Substantial Growth
The market capitalization of USDC, the second-largest stablecoin, also experienced a notable growth of approximately $1.6 billion this week. As per TradingView data, USDC’s market cap reached $34.5 billion, the highest since March 2023. David Shuttleworth, a research partner at Anagram, noted that the majority of this growth occurred on the Ethereum network, with $1.36 billion, while USDC on Solana saw $356 million in inflows.
Funds Transferred to Exchanges Amid Market Sell-Off
This growth in stablecoin supply coincided with a transfer of funds to exchanges following the market sell-off. Binance, the largest cryptocurrency exchange, received over $1.5 billion in USDT deposits and $820 million in USDC deposits within just four days of the market crash, according to DefiLlama data.
Increased Buying Pressure
Digital asset broker FalconX reported a significant buying pressure, noting that nearly all types of investors, including hedge funds, venture funds, and retail aggregators, were net buyers during this period.
The Crucial Role of Stablecoins
Stablecoins, which are tokenized versions of traditional fiat currencies, bridge the gap between conventional money and blockchain-based markets. They provide essential liquidity for trading and lending in the crypto space. An expanding stablecoin supply is often indicative of a healthy broader market.
Total Stablecoin Market Cap Trends
The total stablecoin market cap experienced rapid growth between November and March, aligning with the rally in cryptocurrency prices and Bitcoin ( BTC) achieving a new record high above $72,000. However, it plateaued for a few months as the crypto market cooled. Last month, signs of renewed growth began to appear.
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