Early in 2025, a Surge in the Stablecoin Market

There was a significant surge in the stablecoin market early in 2025, with a $20 billion increase in total supply. This marks a 10% rise from January, bringing the total supply to nearly $205 billion. The spike, according to data from Glassnode, follows a dip in late 2024 when the supply decreased from $187 billion to $185 billion.

Stablecoins See A Strong Rebound

For trading cryptocurrencies, stablecoins—like USDT and USDC—often act as a reserve for investors awaiting the right moment to buy assets such as Bitcoin. The recent rise indicates renewed investor interest, particularly after last year’s slowdown.

> Since Jan 1, the aggregate #stablecoin supply has increased by $20.17B (+10.9%), now reaching more than $205B.
>
> For comparison, December’s peak was $187B, but supply contracted in the last two weeks of 2024, dropping to $185B by January 2025.
> — glassnode (@glassnode) March 13, 2025

This recovery is especially noteworthy considering the previous decline. For most of 2024, the market was losing stablecoins, but this trend has recently reversed. Although historical patterns suggest that Bitcoin’s price may be affected, it remains uncertain whether this increase will lead to more cryptocurrency purchases.

Bitcoin Investors Watching Closely

A growing stablecoin supply is often viewed as a bullish indicator for Bitcoin. Historically, the price of Bitcoin has risen alongside the increase of stablecoins. The reasoning is straightforward: more stablecoins mean more potential capital available for market entry.

Some analysts believe this new influx could drive Bitcoin prices higher. However, not all stablecoins are used for trading; many are held for remittances, payments, or to hedge against inflation, particularly in countries with unstable local currencies.

As of today, the cryptocurrency market cap stood at $2.65 trillion.
Chart: TradingView

Stablecoin Exchange Holdings Drop 21%

Despite the total supply rising, only 21% of stablecoins are currently held on exchanges. This marks a significant drop from 2021 when over 50% of the supply was available for immediate trading, according to Glassnode. This trend suggests that while new coins are issued, not all are immediately deployed into crypto markets.

This could indicate one of two scenarios: stablecoins are being utilized more outside of exchanges, or investors are still waiting for the right moment. If the latter is the case, the impact on Bitcoin may be less significant than anticipated.

What This Means For Bitcoin’s Future

The resurgence in the stablecoin market is generally a positive development for the cryptocurrency sector. However, it is unclear whether this will lead to a short-term increase in Bitcoin prices. The usage of stablecoins has varied, and other economic factors will play a role in this evolution.

As of now, Bitcoin was trading at 82,264, down 1.1% and 6.9% in the daily and weekly frames.

Featured image from Warwick Business School, chart from TradingView