Stablecoin Expansion to Drive the Next Crypto Rally as Market Cap Hits $200B: CryptoQuant

Liquidity in the cryptocurrency market has surged, with the total market capitalization of stablecoins recently surpassing $200 billion. This increase has historically preceded price rallies.

When the liquidity impulse grows, a rally usually follows.

USDT’s 30D market cap just turned positive (after contracting -2%), while USDC is surging 20%—its fastest pace in a year.

If stablecoin momentum continues, higher prices may be next. pic.twitter.com/fD8sQkKSKM

— CryptoQuant.com (@cryptoquant_com) January 30, 2025

According to data from CryptoQuant, stablecoin liquidity has increased since the U.S. presidential election, with major stablecoins like Tether’s USDT and Circle’s USDC leading the expansion.

Market Cap Hits Record High Amid Growing Liquidity

The total value of USD-denominated stablecoins reached an all-time high of $200 billion last week. Since then, it has grown further to $204 billion, representing an increase of $37 billion since November 4.

CryptoQuant reports that this surge in stablecoin liquidity reflects growing investor confidence, which has historically catalyzed crypto market upswings.

The expansion has been primarily driven by Tether’s USDT, the dominant stablecoin in the market. However, USDC, which had been losing market share, is now regaining traction.

A growing stablecoin supply often indicates increased buying power for traders, fueling demand for cryptocurrencies like Bitcoin and Ethereum.

Another key indicator of market liquidity, according to CryptoQuant, is the volume of stablecoins held on centralized exchanges.

The total value of USDT on these platforms has risen from $30.5 billion on November 4 to $43 billion, an increase of about 41% ($12.5 billion).

More stablecoins on exchanges show that traders have large amounts of capital on hand to deploy into crypto assets.

Such liquidity inflows have often preceded major price rallies, as traders convert stablecoins into volatile assets to seek gains.

USDT and USDC Lead the Stablecoin Expansion

Stablecoin liquidity impulse, measured as the 30-day percentage change in market capitalization, has turned positive.

CryptoQuant analysts suggest this may signal an upward move in Bitcoin and the broader crypto market.

USDT’s liquidity impulse had been contracting by 2% at the beginning of 2024 but has now turned slightly positive, hinting at an uptick in crypto demand.

Meanwhile, USDC’s liquidity impulse has expanded by 20%, the fastest growth rate in at least a year.

Tether’s USDT remains the dominant player, with its market capitalization reaching $139 billion, increasing by $19 billion (15%) since November 4.

Meanwhile, USDC has experienced a strong comeback, increasing by $17 billion (48%) over the same period to reach a market cap of $52.5 billion.

The increase in liquidity and trading capital has historically coincided with crypto market rallies.

If past trends continue, an expanding stablecoin supply may contribute to increased market activity in Bitcoin and other digital assets.