According to the latest on-chain data, liquidity in cryptocurrency markets has reached an all-time high. This is the impact of rising liquidity on the price of Bitcoin and its future path.
Stablecoin Market Cap Reaches New Highs – Impact on Bitcoin Price
In its latest report, CryptoQuant open That liquidity in the cryptocurrency market reached a record high in late September, sparking talks about a resumption of the Bitcoin bull market. According to the on-chain analytics firm, cryptocurrency market liquidity is measured by stablecoin value and market cap, which now stands at around $169 billion.
Data from CryptoQuant shows that the total market capitalization of major USD-backed stablecoins has increased significantly so far in 2024, rising 31% (equivalent to $40 billion) year-to-date. However, most of the growth was driven by the two largest stablecoins, USDT from Tether and USDC from Circle.
Source: CryptoQuant
Unsurprisingly, USDT and USDC continue to dominate the stablecoin industry, with a market share of 71% and 21% respectively. According to CryptoQuant data, USDT’s market capitalization grew by 30% in 2024 (about $28 billion) while USDC’s market capitalization is up 44% (about $11 billion) year-to-date.
Another strong sign of increasing market liquidity are record stablecoin balances on centralized exchanges. Specifically, this growth was driven by USDT (ERC20 on Ethereum), which saw its balances on exchanges reach a record high of 22.7 billion in October. This reflects an increase of 54% (about $8 billion) so far in 2024.
Historically, increasing balances of stablecoins on exchanges are positively associated with rising cryptocurrency market prices, specifically the price of Bitcoin. This is because large stores of stablecoins can signal more purchasing power to investors, as they can quickly trade stablecoins for other cryptocurrencies on exchanges (which are known for offering these trading services).
Larger stablecoin balances on exchanges could also indicate investors’ willingness to accumulate crypto assets. Ultimately, this buying pressure tends to push asset prices to the upside, especially since investors often buy anticipating upward price movement.
As liquidity increases in the market, investors are wondering if Bitcoin’s bull run will resume soon. It should be noted that the total amount of USDT (ERC20) on exchanges has decreased It has risen 146% from $9.2 billion to $22.7 billion since January 2023, when the current cycle officially began.
However, investors may want to lower expectations, considering that these USDT balances have increased by 20% since August 2024 while the price of Bitcoin has remained relatively calm.
Bitcoin price at a glance
As of this writing, Bitcoin is worth around $62,750, reflecting a roughly 3% increase in the past day.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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