The market capitalization of USD Tether (USDT) has exceeded $120 billion, while that of all stablecoins together reaches $172 billion. This increase implies a greater issuance of these coins, which generally positively influences the price of bitcoin. In recent days, the market capitalization of USDT (which is the largest stablecoin in the world) has increased by more than USD 1.6 billion, by 0.30%, reaching approximately 120.14 billion dollars, according to data from CoinMarketCap.
Historical chart of USDT market capitalization. Source: CoinMarketCap. In the same period, the total capitalization of stablecoins has risen about 2.2 billion dollarsor 0.2%, indicate DeFiLlama data, after going from just over $169 billion to $172 billion. For its part, USDC, which is the second largest stablecoin on the market only behind USDT, has seen its capitalization increase by more than 200 million dollars, standing at 35 billion dollars at the close of this article, after starting from 34.8 billion. This phenomenon not only reflects an increase in the supply of stable cryptocurrencies, but also a greater availability of liquidity in the cryptocurrency market. Stablecoins, being equivalent to the dollar, allow investors hold funds in cryptocurrencies without being directly exposed to the volatility of assets like bitcoin. The issuance and capitalization of stablecoins is often seen as a catalyst for bitcoin price. This is because many investors use these currencies to await moments of greater clarity in the bullish market trends. Thus, they can buy volatile assets like bitcoin without running the risk of losing value in the event of market declines. Alice Liu, an analyst at CoinMarketCap, recently indicated that the increase in stablecoin capitalization, which has risen more than 36% in the last twelve months, suggests that there is a “huge reserve of cash ready to be deployed in the market of cryptocurrencies as soon as bitcoin rises again,” as reported by BitcoinDynamic. The current $172 billion in stablecoins is approaching its all-time high of just over $180 billion, recorded in 2022. This data is important, especially considering that The bitcoin and cryptocurrency market is in a different context than at that time.
In 2022, the market began its bearish cycle after the bullish rally of 2021, while Today a bull market is perceived in a consolidation phase after reaching a record price seven months ago.
This difference indicates greater liquidity available in stablecoins to be invested in bitcoin and other volatile cryptocurrencies, suggesting a potential increase in the price of these assets. Although it must be mentioned that stablecoins are also used for other purposessuch as depositing into DeFi protocols to earn returns, which could dilute their direct impact on the price of bitcoin.
This article was created using artificial intelligence and edited by a human Editor.