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Stablecoin Expansion Continues as Bitcoin Rally Appears to Stall

  • The cumulative supply of the top three stablecoins – USDT, USDC, and DAI – has increased to $141.42 billion, the highest since May 2022.

  • The data indicates that capital continues to flow into the crypto market.

  • Other indicators like bitcoin’s MVRV Z-score suggest there is plenty of upside left in the top cryptocurrency by market value.

Bitcoin’s {{BTC}} steep rally has recently lost impetus. Still, the supply of stablecoins or dollar-pegged cryptocurrencies, often considered a powder keg that could be used to fund token purchases, continues to rise, reassuring stability to bitcoin bulls.

Bitcoin hit record highs above $73,500 on March 14 and has since struggled to keep gains above $70,000, mainly due to the dwindling probability of Fed rate cuts in June. At press time, the leading cryptocurrency by market value was changing hands at $66,300, down 10% from its all-time high.

However, during the same time, the cumulative supply of the top three stablecoins, tether (USDT), USD Coin (USDC), and DAI (DAI), which dominate the stablecoin market with over 90% share, increased by 2.1% to $141.42 billion, reaching its highest level since May 2022, according to data from charting platform TradingView. The cumulative supply is up over $20 billion this year.

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The continued expansion in the supply of stablecoins, a proxy for liquidity, is a positive sign for the crypto market, according to Reflexivity Research.

“As this [stablecoin supply] continues to trend up, this shows that capital continues to flow into crypto markets," Reflexivity Research said in a newsletter dated April 2.

In other words, dip demand for bitcoin could be strong, and the broader uptrend may soon resume.

Supply of top three stablecoins continues to rise. (TradingView)
Supply of top three stablecoins continues to rise. (TradingView)

Over the years, stablecoins led by tether have emerged as the primary mechanism for purchasing cryptocurrencies in the spot market and trading derivatives. Since late 2021, traders have increasingly preferred crypto futures margined and settled in stablecoins than token-margined ones.

Stablecoin-margined futures offer a linear payoff where the value of the collateral remains steady irrespective of market volatility. As such, traders do not have to constantly look for hedging their collateral.

Other indicators like the Z-score of bitcoin’s market value-to-realized value (MVRV) ratio also indicate that the path of least resistance is on the higher side.

The MVRV Z-score measures the market value’s deviation from the realized value. The latter approximates the value paid for all coins in existence by adding the market value of coins when they last moved on the blockchain and is considered a proxy for fair value.

Historically, a below-zero MVRV Z-score ( has marked market bottoms, while a reading above seven has marked tops. Glassnode data show, at press time, the Z-score was 2.87, a sign bitcoin is far from being overbought or near a major market top.

Bitcoin's MVRV Z-score. (Glassnode)
Bitcoin's MVRV Z-score. (Glassnode)