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Crypto Market Peak? Stablecoin Supply Surge Says There's More Room To Run
Stablecoin Supply Trends And Market Cycles
On-chain data shows an interesting correlation between the stablecoin market and the bull and bear cycles of Bitcoin and other cryptocurrencies. This pattern, identified by on-chain analytics platform IntoTheBlock, suggests that stablecoin supply has historically peaked alongside major market tops. The relationship implies that a surge in stablecoin supply often signals the final stages of a bull run, with declines in supply typically coinciding with the onset of bearish conditions.
Related Reading: Bitcoin Boost: Cathie Wood’s Ark Invest Drops $80 Million On BTC—Bullish Signal?A look at previous market cycles reinforces this trend, particularly in the case of Bitcoin. In April 2022, the total stablecoin supply reached an all-time high of $187 billion. Soon after, supply began to decline, aligning perfectly with the start of the last bear market. This phase saw Bitcoin undergo a prolonged downturn, with prices steadily falling until they bottomed out in January 2023. The sharp decline in stablecoin supply throughout that period reflected a broader shift in investor sentiment as liquidity left the market.
At the time of writing, the stablecoin supply has continued to climb despite Bitcoin’s 24% price correction from its recent all-time high. The stablecoin supply has risen to $219 billion and continues to climb. This suggests that the market is still in a mid-cycle phase rather than approaching its peak.
Image From X: IntoTheBlock
Stablecoins Closing In On Ethereum’s Market Cap
Another notable observation regarding the stablecoin market is that despite the recent price stagnation in the broader crypto market, stablecoins still have significant liquidity. Notably, the total stablecoin supply is now just $10 billion away from Ethereum’s market capitalization
Although a rising stablecoin supply reflects growing investor caution, it also means a large pool of capital is ready to be deployed once market conditions improve.
Image From X: IntoTheBlock
At the time of writing, Bitcoin is trading at $84,325, having spent most of the past 24 hours trading between $83,688 and $84,504. On the other hand, the crypto market saw a modest increase of 0.3% in the past 24 hours. It is currently at $2.75 trillion, down by 25.8% from its $3.72 trillion peak in December 2024
Related Reading: Bitcoin Reserve War: Congressman Fights Trump’s Crypto PlansIf the cycle were nearing its end, history suggests that the stablecoin supply would have already started declining. Instead, the rising trend points to continued market participation and potential for further upside.
Featured image from Midas, chart from TradingView