The circulating supply of the four biggest stablecoins has exploded to reach new all-time highs, which suggests that buyers might be preparing to spark another leg up for the bitcoin and cryptocurrency markets.
Cumulatively, the capitalization of USD Coin (USDC), Tether (USDT), Binance USD (BUSD), and Dai (DAI) has gained nearly 190% from $27 billion to reach almost $78 billion since the start of 2021.
In its May 3 Week on Chain report, Glassnode on-chain analytics provider said that Tether is strongly positioned as the stable token industry’s leader. It represents 67% of the top four stablecoins’ combined capitalization. USDT’s total minted supply reached an all-time high of $51.78 billion at the end of the past week after increasing by around $1.48 billion or 3% in the past seven days.
USDC supply has also increased by nearly $1 billion in the past week, with its market cap currently hovering around $14.5 billion, according to CoinGecko. It shortly tapped a peak of $15 billion on April 30.
BUSD’s circulating supply tagged a record of $7.8 billion on May 3. On the other hand, DAI’s supply is at an all-time high of $3.9 billion at the time of publication.
Glassnode mentions that Bitcoin’s Stablecoin Supply Ratio (SSR) that measures the BTC supply divided by the stablecoin supply is perched at a year-to-date low of 13.4 with the surging supply and is nearing its all-time-low of 9.6.
The market chart indicates that SSR has been constantly low in 2021 and 2021 as stablecoin supplies have greatly grown in proportion to BTC’s price appreciation. Based on data acquired from Glassnode, a dropping SSR value is a bullish sign that the global stablecoin supply is becoming bigger when compared to the bitcoin market capitalization:
“As the total supply of stablecoins increase, it suggests an increased ‘buying power’ of crypto-native capital that can be quickly exchanged and traded into BTC and other crypto-assets.”
Aave’s liquidity mining incentives launched on April 27 and might have also given a major boost to stablecoin demand as the majority of these rewards were targeted towards staking USDC, USDT, and DAI. Decentralized finance (DeFi) investors have now observed that Aave’s yield farming had an instant impact on stablecoin borrowing volumes that have more than doubled since late April.