Impact of Rising Liquidity on Bitcoin Price
Recent on-Chain Data has indicated that liquidity in the Cryptocurrency markets has reached an all-time high, sparking discussions about its implications for Bitcoin's price and future trajectory.
Stablecoin Market Cap Reaches New Highs
The latest report from CryptoQuant has revealed that the liquidity in the Crypto Market hit a record high in late September. The market liquidity is measured based on stablecoin value and market capitalization, which currently stands at approximately $169 billion.
- Data from CryptoQuant shows that the total market capitalization of major US dollar-backed stablecoins has increased significantly in 2024, rising by 31% year-to-date, equivalent to $40 billion. The Growth has been primarily driven by Tether’s USDT and Circle’s USDC.
Source: CryptoQuant
USDT and USDC continue to dominate the stablecoin industry, with market shares of 71% and 21%, respectively. USDT’s market capitalization has grown by 30%, about $28 billion, while USDC’s market cap is up by 44%, equivalent to $11 billion year-to-date.
Another notable signal of growing market liquidity is the record-high stablecoin balances on centralized Exchanges. The increase in balances on exchanges, particularly USDT (ERC20 on Ethereum), has reached a record high of 22.7 billion in October, showing a 54% increase so far in 2024.
Historically, higher stablecoin balances on exchanges have been correlated with higher Cryptocurrency prices, especially Bitcoin. The larger stores of stablecoins indicate more buying power for investors, as they can easily trade stablecoins for other cryptocurrencies on exchanges.
The increasing stablecoin balances on exchanges also suggest that investors are ready to accumulate Crypto Assets, creating buying pressure that tends to drive asset prices upward.
With the growing liquidity in the market, investors are speculating about the potential resumption of the Bitcoin bull run. However, despite the significant increase in USDT balances on exchanges, investors may need to temper their expectations as Bitcoin’s price has remained relatively stable in recent months.
Bitcoin Price Update
As of the latest data, Bitcoin is currently valued at around $62,750, reflecting a nearly 3% increase in the past day.
Price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
