Stablecoin Market Cap Hits All-Time High, Suggesting Bullish Signal for Bitcoin

The stablecoin sector has witnessed a significant expansion since the beginning of July, coinciding with the overall upswing in the cryptocurrency market.

The stablecoin sector has witnessed a significant expansion since the beginning of July, coinciding with the overall upswing in the cryptocurrency market.

What Happened: In an exclusive post on Wednesday, Ki Young Ju, CEO of on-chain analytics firm CryptoQuant, noted that stablecoins have been flowing into the market since early July, reaching an all-time high last week. He highlighted that Tether (CRYPTO: USDT) , the world’s largest stablecoin by market cap, accounted for 70% of the total share.

Previous instances of USDT market growth were followed by notable rallies in Bitcoin (CRYPTO: BTC). Though not significant yet, the analyst acknowledged that the upward trend in stablecoins is noteworthy.

In a note shared with Decrypt, CryptoQuant noted that stablecoin liquidity needs to expand further, especially from USDT, to justify a continued increase in Bitcoin’s price.

See Also: Dogecoin Up 8% But One Indicator Shows It Could Explode 75% Higher Still

Why It Matters: As is well known, stablecoins allow traders to preserve their fiat value without cashing out. Due to this, they are the preferred way for traders, especially on non-fiat cryptocurrency exchanges, to enter and exit trades.

Hence, spikes in stablecoin market cap could be interpreted as bullish signals, as investors are likely using them to buy other cryptocurrencies, including Bitcoin.

As of this writing, more than $165 billion worth of stablecoins are in circulation, with most major ones pegged to $1.

Price Action: At the time of publication, Bitcoin was trading at $64,783.01, following a 0.57% dip in the last 24 hours, according to data from Benzinga Pro.

The market has rallied sharply since pro-cryptocurrency presidential candidate Donald Trump escaped an attempt on his life.

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