Glassnode predicts BTC rally as stablecoin provide tags document highs

The circulating provide of the four-largest stablecoins has spiked to new all-time highs, suggesting consumers may quickly spark one other leg up for the Bitcoin and crypto markets.

The mixed capitalization of Tether (USDT), USD Coin (USDC), Binance USD (BUSD), and Dai (DAI) has surged virtually 190% from $27 billion to virtually $78 billion because the starting of this yr.

In its Might 3 Week on Chain report, on-chain analytics supplier, Glassnode, famous that Tether is firmly positioned because the stable token sector’s chief, representing two-thirds of the highest 4 stablecoins’ mixed capitalization. USDT’s complete minted provide hit an all-time excessive of $51.78 billion on the finish of final week after rising by $1.48 billion or 3% in simply seven days.

USDC provide has additionally elevated by roughly $1 billion over the previous week, with its capitalization presently sitting at $14.5 billion, in accordance with CoinGecko. It briefly tapped a peak of $15 billion on April 30.

BUSD’s circulating provide tagged a document of $7.eight billion on Might 3, whereas DAI’s provide is at an all-time excessive of $3.9 billion as of this writing.

With the surging provide, Glassnode highlights that Bitcoin’s Stablecoin Provide Ratio (SSR), which measures the Bitcoin provide divided by the stablecoin provide, is sitting at a year-to-date low of 13.4, and is approaching its all-time-low of 9.6.

Bitcoin-Stablecoin Provide Ratio: Glassnode

The chart exhibits that SSR has been persistently low throughout 2020 and 2021 as stablecoin provides have largely grown in proportion to Bitcoin’s worth appreciation.

In keeping with Glassnode, a reducing SSR worth is a bullish sign that the worldwide stablecoin provide turning into bigger relative to the Bitcoin market cap:

“As the full provide of stablecoins improve, it suggests an elevated ‘shopping for energy’ of crypto-native capital that may be rapidly exchanged and traded into BTC and different crypto-assets.”

Aave’s liquidity mining incentives launched on April 27 would have additionally given a lift to stablecoin demand as the vast majority of the rewards had been focused in direction of staking USDT, USDC, and DAI. DeFi traders have observed that Aave’s yield farming had a right away affect on stablecoin borrowing volumes which have over doubled since late April.