Emily Walker
The cryptocurrency and US stock markets began the week poorly, reacting adversely to the launch of China’s AI platform, DeepSeek. However, Bitcoin’s price has rebounded above the $100,000 mark and remained stable as the week drew to a close.
A recent on-chain analysis indicates that liquidity on centralized exchanges has hit a new all-time high, implying increased buying capacity for crypto investors. This raises the question: will this renewed buying capacity elevate Bitcoin’s price further?
Effect of Increasing Stablecoin Supply on Crypto Valuations
In its latest weekly analysis, blockchain analytics firm CryptoQuant reported that liquidity in the crypto sector has significantly increased since the US Presidential election in November 2024. The liquidity is gauged by the total value of circulating stablecoins, which has recently reached a historic peak.
Data from CryptoQuant shows that the market value of dollar-pegged stablecoins exceeded $200 billion last week, now standing at $204 billion – the highest ever recorded. This marks over a 22% growth since Donald Trump’s election victory.
A key factor in this rise is Tether’s USDT, which comprises nearly 70% of the USD-pegged stablecoin market. Currently, USDT’s market capitalization is approximately $139 million, reflecting a 15% increase since last November.
Notably, this growth is also evident in the stablecoin reserves of centralized exchanges, with USDT holdings on these platforms reaching unprecedented figures. In the last three months, the market cap of USDT on centralized exchanges has risen from $30.5 billion to $43 billion, marking a 41% increase.
Dollar-backed stablecoins are critical for providing liquidity on centralized exchanges. Thus, an increase in stablecoin availability on these platforms suggests enhanced buying capabilities for crypto traders.
According to CryptoQuant, “The next significant uptrend for Bitcoin and crypto valuations might be imminent as stablecoin liquidity begins to expand again.” Historically, a growing stablecoin market cap, especially on centralized exchanges, often correlates with rising Bitcoin prices.
CryptoQuant further elaborated:
The liquidity impulse of USDT (30-day % change in market cap) is currently slightly positive after a 2% contraction at the beginning of 2025. Such an acceleration generally propels crypto prices higher. Meanwhile, USDC’s liquidity impulse is growing at a 20% rate, the fastest in over a year.
Current Bitcoin Price Overview
As of now, Bitcoin is trading at approximately $102,400, which is nearly a 2% decrease over the last 24 hours.
Image courtesy of iStock, chart provided by TradingView