The Impact of Growing Stablecoins On Bitcoin and Crypto Prices

The crypto and US equities markets started the week on the worst possible note, reacting negatively to the launch of the Chinese AI platform DeepSeek.

The crypto and US equities markets had a mixed start to the week, reacting differently to the launch of the Chinese AI platform DeepSeek. While the stock markets opened the week in the green, crypto prices reacted negatively to the news, with the Bitcoin price dropping below the $100,000 level on Monday.

However, the Bitcoin price has since recovered and returned above the $100,000 level, moving mostly sideways to close the week. According to a recent on-chain report, liquidity on centralized exchanges has reached a new record high, suggesting that crypto bulls now have increased buying power.

The question is — can this fresh buying power push the Bitcoin price to a new high?

Impact Of Growing Stablecoins On Crypto PricesIn its latest weekly report, blockchain intelligence firm CryptoQuant revealed liquidity in the crypto market has experienced a significant boost since the US Presidential election in November 2024. Liquidity in crypto is measured by the total value of circulating stablecoins, which recently reached a new all-time high.

According to data from CryptoQuant, the market capitalization of dollar-backed stablecoins surpassed the $200 billion mark last week and is currently at $204 billion, a record high. This value represents an over 22% expansion since Donald Trump’s victory in the US elections.

One major contributor to this growth is Tether’s USDT, which accounts for nearly 70% of the USD-denominated stablecoin market. USDT’s market cap currently stands at around $139 million, reflecting a 15% increase since November last year.

Interestingly, this expansion has been mirrored in the stablecoin balances of centralized exchanges, with the total amount of USDT on these trading platforms now at record levels. CryptoQuant revealed that the market cap of USDT on centralized crypto exchanges has increased from $30.5 billion to $43 billion in the past three months, representing a 41% increase.

Dollar-backed stablecoins are an important source of liquidity for trading on centralized exchanges. Hence, an expansion in the stablecoin supply of exchanges implies an increase in the buying power of crypto investors.

“The next leg up for Bitcoin and crypto prices could be around the corner, as the stablecoin liquidity impulse starts to expand again,” CryptoQuant noted. Moreover, a growing stablecoin market cap — especially on centralized exchanges — is historically correlated with higher Bitcoin prices.

CryptoQuant added:

USDT’s liquidity impulse (30-day % change in market capitalization) is now slightly positive after contracting by 2% at the start of 2025. A further acceleration typically drives crypto prices higher. Meanwhile, USDC’s liquidity impulse is expanding by 20%, its fastest pace in at least a year.

Bitcoin Price At A GlanceAs of this writing, Bitcoin is valued at around $102,400, reflecting an almost 2% decline in the past 24 hours.