Originally published on: November 02, 2024
As Bitcoin continues to dance around the $70,000 mark, experts are analyzing the factors that could propel the market to new highs. According to Ki Young Ju, the founder and CEO of CryptoQuant, the growing supply of stablecoins may not be the game-changer that some traders hope for.
While stablecoin reserves have been steadily increasing, Ju argues that this surge in volume isn’t sufficient to create substantial liquidity on the buy side and push BTC prices upward. The Bitcoin-to-Stablecoin Exchange Reserve Ratio, a metric Ju highlighted, reveals that there is currently six times more Bitcoin held on exchanges than stablecoins.
Despite stablecoin reserves reaching $30 billion in September 2021, the total market capitalization of stablecoins stands at around $166 billion. Surprisingly, only 21% of these stablecoins are available on exchanges for trading purposes, contrasting sharply with figures from 2021 when over half of the total supply sat on trading platforms.
Ju points out that the rising stablecoin supply isn’t primarily for trading in today’s market cycle. A growing trend shows stablecoins being used as a store of value or for remittances. Chainalysis data shows that over 50% of remittances sent to countries like Venezuela, Argentina, Brazil, Colombia, and Mexico in 2022-2023 involved using stablecoins for value storage.
This preference for stablecoins extends to jurisdictions with high inflation, such as Turkey, where stablecoin purchases make up a significant portion of GDP. Ju suggests that liquidity from digital asset exchange-traded funds and US dollar liquidity from platforms like Coinbase will play a vital role in supporting the markets in the coming months.
Dean Skurka, the CEO of WonderFi, echoes Ju’s sentiments, highlighting the importance of ETF inflows and institutional interest in Bitcoin. Skurka believes that this institutional support, combined with macroeconomic factors in the US and Canada, will act as positive catalysts for Bitcoin’s price in the future.
If you’re looking to stay ahead in the markets, sign up for the Markets Outlook newsletter for critical insights, investment opportunities, risk mitigation strategies, and trading tips delivered to your inbox every Monday. Join us and make informed decisions for a successful trading journey!
Don’t miss out on the latest crypto trends and market updates — subscribe now to the Markets Outlook newsletter and stay ahead of the curve.
