Growing stablecoin liquidity could signal an impending Bitcoin rally, as suggested by recent data. A report from CryptoQuant outlines the resurgence in liquidity for Tether (USDT) and USD Coin (USDC), with the latter experiencing growth not seen in a year.
Since the U.S. presidential election, the cryptocurrency market has experienced improved liquidity conditions. This enhancement has been largely attributed to stablecoins, which are often precursors to price increases. The market capitalization for U.S. dollar-pegged stablecoins recently surpassed the $200 billion threshold, reaching a peak of $204 billion. This represents a $37 billion increase since early November.
USDT, the dominant force in stablecoin liquidity growth, currently holds a market capitalization of $139.4 billion, reflecting a 15% increase, or $19 billion, since November 4. Concurrently, USDC has achieved a 48% surge in market capitalization, rising by $17 billion, now standing over $53.3 billion.
Additionally, the liquidity impulse for USDT, defined by the 30-day percentage change in market capitalization, has turned slightly positive following an early 2024 decline of 2%. USDC's liquidity impulse has shown a remarkable 20% growth, a level not reached in nearly a year.
CryptoQuant emphasizes, "Historically, liquidity impulse growth precedes a rally in crypto prices. A further acceleration typically boosts crypto prices." This expansion of stablecoin liquidity extends to centralized crypto exchanges, where USDT deposits have reached unprecedented levels, increasing from $30.5 billion on November 4 to $43 billion—a 41% rise.
CryptoQuant concludes that the total value of stablecoins deposited on exchanges serves as a critical liquidity source for trading, generally correlating with higher cryptocurrency prices.