Cryptocurrencies are experiencing an influx of fresh capital as the stablecoin market expands after more than 18 months. Tether’s USDT, in particular, has reached an all-time high market cap of $89 billion. Glassnode data reveals that the combined market capitalization of the largest stablecoins grew by nearly $5 billion in the past month, totaling $124 billion. This growth marks a significant reversal from the prolonged downtrend since May 2022, coinciding with the onset of the challenging crypto winter. Stablecoins, functioning as tokenized cash, play a vital role in connecting traditional fiat money with blockchain-based digital asset markets, providing liquidity for trading and lending. The upswing in stablecoin market size is seen as a positive signal for the overall health of the recent crypto rally, indicating improved liquidity and a more capital-friendly environment, as noted by Tanay Ved, an analyst at Coin Metrics.
Tether Supply Witness Tremendous Increase to All-Time Highs
The majority of the expansion in stablecoins is attributed to Tether (USDT), the largest stablecoin by market cap, widely utilized on centralized exchanges and in transactions within developing economies. According to a Monday report from Matrixport, USDT’s supply has surged by $7 billion since September, with significant minting activity noted since mid-October.
CoinGecko data reveals that USDT’s market cap has been steadily increasing throughout 2023 and is now approaching $90 billion, surpassing its previous all-time high in 2022. However, the growth of competitors like USDC and BUSD had offset USDT’s expansion until recently.
Noelle Acheson, analyst and author of the Crypto Is Macro Now newsletter, sees the upward trend in USDT as a bullish signal for crypto assets, indicating growing investor interest. She emphasizes that while the stablecoin market cap is on the rise, it remains below levels seen earlier this year, suggesting a more optimistic outlook compared to the past.
