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The latest on-chain data shows that the stablecoin market is approaching a new phase in terms of valuation. Here’s how increased liquidity could impact Bitcoin and the overall cryptocurrency market.
Could a Stablecoin Cap Send Bitcoin Price to $100,000?
IntoTheBlock’s market intelligence platform open In its weekly report, the market value of stablecoins witnessed significant growth in the past month. According to the cryptocurrency company, the market cap of stablecoins rose above $190 billion this week for the first time since late April 2022 when Bitcoin was hovering around the $40,000 mark.
This impressive growth comes on the back of Bitcoin’s unprecedented rise to a six-figure valuation and the explosion of its 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 move toward riskier assets like cryptocurrencies.
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Specifically, this expansion has been primarily to the benefit of Tether’s USDT, which still completely dominates the stablecoin market. Data from IntoTheBlock shows that USDT has around 72% market share, with a market capitalization of over $133 billion – reminiscent of the highs of the cryptocurrency market in 2021.
Interestingly, demand for the Tether stablecoin appears to be on the rise, with a weekly mint of over $3 billion in new USDT tokens. Notably, more than $13 billion USD has been minted since the beginning of November, with stablecoins largely flowing towards centralized exchanges.
The injection of new liquidity into central stock exchanges was reflected in the market, especially with the strong upward momentum witnessed in the past few weeks. Historically, increased stablecoin inflows to exchanges correlate positively with market prices, as they often represent higher “purchasing power” for investors.
As such, a continuation of this positive trend could be pivotal to the dream of Bitcoin surpassing $100,000. While the major cryptocurrency has seemingly recovered from its recent drop below the $93,000 level, it hasn’t exactly shown enough strength to surpass the six-figure figure.
As of this writing, Bitcoin’s price is still hovering around the $96,500 level, reflecting an increase of more than 2% over the past 24 hours. According to data from CoinGecko, the major cryptocurrency is still in the red on the weekly time frame, with a 3% decline in the past seven days.
BTC Market Becomes Stable and Mature: IntoTheBlock
In TheBlock too It has been detected In its weekly report, the Bitcoin market climate appears to be maturing, with volatility currently trending lower. According to the blockchain platform, high market volatility has been a long-standing point of criticism for BTC as a store of value.
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However, IntoTheBlock noted that investors can expect Bitcoin’s price performance to be more stable, with retail and institutional adoption increasing and volatility decreasing. Thus, the leading cryptocurrency can become a more reliable store of value.
Featured image from iStock, chart from TradingView
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