Stablecoin Market Cap Hits New All-Time High, Setting Stage For Potential Astronomical Bitcoin Rally

In a resounding show of strength, the total stablecoin market capitalization, excluding algorithmic stablecoins, has reached a new all-time. Data shows that the total stablecoin market cap is at its highest point ever, surpassing its last peak in March 2022.

A rise in stablecoin markets is considered a bullish sign, reflecting the influx of fresh capital into crypto.

Stablecoin Market Cap Surge Bolsters Bitcoin Potential 

Stablecoin’s market cap rose by 0.8% in recent days to a new record high of $169.74 billion. The market reached an all-time high of $167 billion in March 2022, but it dropped shortly after, slipping to $122 billion by October of that year.

The stablecoin market has seen steady growth since the start of 2024, data from DefiLlama shows. In a Tuesday post on Twitter (aka X), crypto analyst Patrick Scott, popularly known as “Dynamo DeFi,” said he believes this trend is an indication that “New money is entering crypto.”

“And just like that, we’re at a new all-time high. Total stablecoin market cap, excluding algorithmic stables, is now at the highest point ever, surpassing its previous high from early 2022,” Scott posited.

The growing stablecoin market cap suggests institutional investors are pouring more money into crypto, but Scott emphasized that retail participation has been steady for about eight months.

Tether’s USDT has been a key contributor to the stablecoin market’s recent growth. The crypto industry’s largest stablecoin, USDT, has seen its market value increase by over 25% this year alone, from $91.69 billion at the start of 2024 to a historic $117.8 billion as of this writing. The stablecoin commands over 70% of the total market cap, as per DefiLlama. USDT is currently the third-largest cryptocurrency by market capitalization behind Ether and is available on 16 blockchains and protocols.

Circle’s USD Coin (USDC) has also witnessed an upward trend this year, achieving a market cap of more than $33 billion, its highest level for 2024, albeit still below its record high of $56 billion in June 2022.

The dramatic uptick in stablecoin issuance has renewed attention to its potential effects on the price of Bitcoin. USDT printing has historically been the impetus for a major market upsurge. In other words, The increase in liquidity from dollar-backed cryptocurrencies is often considered rocket fuel for the benchmark crypto. 

At publication time, BTC was changing hands at $62,316.34 after topping out just below $65,000 on Aug. 26. The heightened liquidity might take some time to reflect in Bitcoin’s price action as the market fully adjusts to the inflow of new stablecoin money.