CryptoQuant Data Shows Stablecoin Liquidity Hits Record Level! What Does This Mean? Here Are the Details

As the October bullish trend continues, the increase in stablecoin liquidity and large Bitcoin (BTC) transactions are paving the way for a potential price rally.

Record Stablecoin Liquidity and Increase in Bitcoin Transactions Could Create BTC Price Volatility

The increase in liquidity of stablecoins, which play an important role in cryptocurrency trading, indicates significant capital waiting to be used.

Record Stablecoin Liquidity

Data from CryptoQuant shows that stablecoin liquidity reached $169 billion as of the end of September, marking a 31% year-to-date (YTD) increase.

Tether (USDT) leads the market with a $28 billion increase in market cap to nearly $120 billion, commanding 71% of the stablecoin market share. Circle’s USDC is up 44% to $36 billion, holding 21% of the market share.

Typically backed by fiat currencies like the US dollar, stablecoins offer price stability in the volatile crypto market.

The increase in stablecoin supply reflects increased fiat deposits, indicating an influx of capital into the crypto ecosystem. The vast majority of spot and futures trading is done against stablecoin pairs, meaning increased liquidity could lead to an increase in crypto purchases.

The Impact of Stablecoin Liquidity on Bitcoin

There is a historical correlation between stablecoins held on exchanges and Bitcoin price increases. Since the beginning of 2023, the total amount of USDT on exchanges has increased by 146%, from $9.2 billion to $22.7 billion.

Despite Bitcoin’s price remaining stable, increasing stablecoin balances indicate a buildup of capital ready to be released.

“Larger stablecoin balances on exchanges are positively correlated with higher Bitcoin and crypto prices,” said Julio Moreno, CryptoQuant’s research director.

Increased stablecoin liquidity could support a Bitcoin rally, especially as historical trends point to significant price movements after mid-October.

*This is not investment advice.