cryptocurrency marketstablecoins indexed to the US dollar reached record levels and Bitcoin (BTC) 
$62,122 The increase in trading could set the stage for a broader rally in the coming weeks. This could maintain the positive seasonal trend in October, when Bitcoin usually performs strongly.
The Link Between Stablecoin Liquidity and Bitcoin
Stablecoin liquidity reached a record high of $169 billion at the end of September, up 31 percent since the beginning of the year. CryptoQuant According to data, this increase is largely Tether‘s USDT and circleIt was driven by the influence of major stablecoin players such as ‘s USDC. While the market value of USDT increased by $28 billion to approximately $120 billion, it maintained its 71 percent market share. On the other hand, the market value of USDC increased by 44 percent, reaching 36 billion dollars, and had a market share of 21 percent.
Stablecoins are valued at a 1:1 ratio like the US dollar to ensure price stability. fiat money units or gold They are known as cryptocurrencies indexed to assets such as. These assets are in turn backed by an equivalent amount of fiat currency, serving to increase the amount of real money entering the cryptocurrency market.
The majority of crypto spot and futures transactions are carried out on stablecoin trading pairs, and the increase in stablecoin supply indicates potential liquidity that can be used for cryptocurrency purchases. Looking at historical data, the stablecoin There appears to be a clear correlation between the increase in the amount and the price of Bitcoin. However, this year the stablecoin balance on exchanges increased by 20 percent.
CryptoQuant Research Director Julio Moreno Commenting on the subject, he said: “The increase in stablecoin balances on exchanges is positively associated with the prices of Bitcoin and other cryptocurrencies. “Since the current bull cycle started in January 2023, the total amount of USDT (ERC20) on exchanges has increased from $9.2 billion to $22.7 billion (146 percent increase).” he said.
Future Prospects for Bitcoin
Bitcoin has fallen over 6 percent since the beginning of October. It has historically only closed negatively twice this month. However, there may be a price increase of up to 16 percent generally after October 15th, and the current stablecoin congestion may support this rise.
In the coming months, the US presidential elections will stand out as a decisive factor for central banks’ monetary policies and crypto regulations. On-chain analytics company centimeterreported an increase in transactions from large asset holders, known as whales, on the Bitcoin network. According to Santiment, such transactions can historically be a precursor to a price rise. Based on this situation, Santiment added, “Metrics on our network show a major revival of dormant activity on the Bitcoin network, with on-chain volume of $37.4 billion, the highest level in the last seven months.”
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
