Stablecoin market caps stay steady amid bitcoin upswing

Stablecoins, a key source of liquidity in crypto, stayed mostly constant during bitcoin’s surge, perhaps indicating that new liquidity is still yet to find its way into crypto


Octavian Lazar/Shutterstock modified by Blockworks


Stablecoin supply has been on a downward trajectory since the TerraUSD collapse in 2022. And despite the crypto market’s bullish week, stablecoins remain flat.

The stablecoin market cap stayed relatively steady at $124 billion during bitcoin’s sudden upswing, failing to break the sector’s levels from early September, according to DeFiLlama. 

Analysts say stablecoin supply is a lagging indicator, but the lack of a stablecoin resurgence could indicate that bitcoin’s bull run isn’t driving new liquidity into the crypto market.

Stablecoins are tokens pegged to a certain asset or value, like the US dollar. Importantly, stablecoins are popular as on and off-ramps for investors.

“[Stablecoins] are, I would say, the ultimate transacting currency of crypto markets,” Clara Medalie, head of research at Kaiko, said. “Right now, the vast majority of every crypto trade is done with a stablecoin, especially as fiat on-ramps [come] under regulatory pressure.”

The stablecoin market cap trended upwards until TerraUSD [UST]’s collapse. It has bled slowly ever since, down to today’s figure of $124 billion from the high around $188 billion, according to DeFiLlama. 

A recent CoinGecko report found that the top 15 stablecoins shed $4.8 billion in market cap in Q3, with USDCoin [USDC] alone shrinking by $2.26 billion. Tether, which stayed flat in Q3, now makes up 67.86% of stablecoins’ market cap, per DeFiLlama.

Vaidya Pallasena, head of ratings at stablecoin rating agency Bluechip, offered two explanations for the decoupling of bitcoin’s [BTC] price from the stablecoin market cap.

 “First, a significant share of overall BTC trading volumes was executed through the CME, wherein trades are settled in cash, not stablecoins,” Pallasena told Blockworks. “Second, BTC trading volumes on crypto exchanges also saw an uptick at the same time, but this has more to do with existing liquidity on exchanges/wallets being deployed to gain exposure in anticipation of an ETF approval, than with new retail participants entering the market.”

Medalie said the stablecoin market cap is a lagging indicator, and it may take a couple of months to see whether the market is ready to resume moving funds into crypto. 

“An investor [is] not going to be like, ‘Okay, markets are increasing, let me go issue 500 million tether.’ They need more convincing price movements to be able to really reinvest in these markets,” Medalie said.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png


Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.



Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space


Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?


Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month


It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet


Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend


Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million