A surge in stablecoin liquidity and large Bitcoin (BTC) transactions is setting the stage for a potential price rally, as the bullish trend for October continues. With stablecoins playing a pivotal role in cryptocurrency trading, the increase in their liquidity signals significant capital waiting to be deployed.
Data from CryptoQuant shows that stablecoin liquidity has reached a record $169 billion as of late September
Tether (USDT) leads the market, with a $28 billion rise in market capitalization to nearly $120 billion, commanding 71% of the stablecoin market share. Circle’s USDC follows with a 44% YTD increase to $36 billion, holding 21% of the market share.
Stablecoins, typically backed by fiat currencies like the U.S. dollar, offer price stability in the volatile crypto market. The rise in stablecoin supply reflects growing fiat deposits, indicating an influx of capital into the cryptocurrency ecosystem. The majority of spot and futures trading is conducted against stablecoin pairs, meaning increased liquidity could lead to an uptick in crypto purchases.
Stablecoin Liquidity’s Impact on Bitcoin
There is a historical correlation between stablecoins held on exchanges and Bitcoin price increases. Since the start of 2023, the total amount of USDT on exchanges has grown by 146%, from $9.2 billion to $22.7 billion. Despite Bitcoin’s price remaining flat, the growing stablecoin balances suggest a build-up of capital poised for deployment into the market.
“Larger balances of stablecoins on exchanges are positively correlated with higher Bitcoin and crypto prices,” said CryptoQuant’s head of research, Julio Moreno. The growing stablecoin liquidity could support a Bitcoin rally, especially as historical trends indicate significant price movements after mid-October.
Whale Activity Signals a Potential BTC Rally
On-chain analytics firm Santiment has reported a surge in large Bitcoin transactions, or “whale” activity, which has historically preceded price rallies. This week saw $37.4 billion in on-chain Bitcoin volume, the highest in seven months. Dormant Bitcoin moving back into circulation is often a precursor to price increases.
As Bitcoin is down over 6% since the start of October, a month known for strong price gains, the current market conditions suggest a potential for recovery. With available stablecoin liquidity and increased whale transactions, Bitcoin could be poised for a significant price surge in the weeks ahead.
Key Catalysts on the Horizon
The upcoming U.S. presidential election may also influence Bitcoin’s future trajectory, as it will shape broader monetary and crypto policies for the next four years. This political factor, combined with record stablecoin liquidity and increasing whale activity, could fuel a strong Bitcoin rally, continuing its historical October performance.
Historically, Bitcoin has seen price jumps of up to 16% after October 15, and with the current market setup, investors are watching closely for the next move in the crypto market.
