- The rising stablecoin presence in this run is hugely encouraging for crypto investors.
- The stablecoin supply might expand greatly, like the previous run, to keep up with the demand and liquidity needs.
- Stablecoin wallets with a non-zero balance were growing rapidly, Santiment observed in a post on X. This continued to occur even as fears of imminent selling pressure after the halving soared over the past three weeks.
Discover how the increasing number of stablecoin wallets is shaping the crypto market and what it means for future trends.
Growing Wallets Show Buying Power is Present
Santiment noted in the post that the USDC non-empty wallets have increased by 13.9%, and Tether wallets by 15.7% in 2024. These are impressive numbers and mirror the rapid growth during the last bull run. Since December 2019, the total number of USDT non-zero wallets has been rising rapidly for nearly three years till October 2022. Since then, the metric saw a quick drop, and a gradual uptrend. This uptrend accelerated in November 2023, showing non-crypto folks were feeling greater FOMO and more willingness to participate in crypto than ever before. This is a positive sign for the entire space.
The Exchange Reserve Did Not Mirror the Previous Bull Run
During the 2020-21 run, the rapidly growing crypto market necessitated enormous amounts of USDT and other stablecoins to be printed. The total supply of stablecoins grew from $3.5 billion in February 2020 to $99 billion in March 2022. Since then, it declined to $67 billion due to the market contraction before beginning to climb again. The exchange reserve mirrored the supply and has slowly climbed in the past 12 months. This might need to start accelerating to replicate the previous bull run and keep pace with the next rapid growth cycle in the crypto market cap, if that scenario unfolds.
Tether Dominance and Market Implications
The Tether dominance chart showed some similarities from the previous halving. Highlighted by the cyan box, the past halving saw the dominance fall for just over two months after the event before shooting higher in August 2020. A falling USDT dominance implies bullish price action across the crypto market, and a rising dominance indicates investors fleeing to the stablecoin and bearish pressure in the market. If the similarities extend, we might see a sharp drop across the crypto market early July, just over six weeks later.
Conclusion
The increasing number of stablecoin wallets and the growing supply of USDT and USDC are clear indicators of the market’s current state and future potential. While the exchange reserves and Tether dominance charts provide mixed signals, the overall trend suggests a bullish outlook for the crypto market. Investors should stay vigilant and consider these metrics when making informed decisions. The next few months will be crucial in determining whether the market can sustain its growth and replicate the previous bull run.
