Stablecoin Growth Is Slowing Down—What It Means For Bitcoin

On-chain data shows the stablecoins have been witnessing a slowdown in growth recently. Here’s what this could imply for Bitcoin and other cryptos.

Stablecoin Market Cap Still Rising, But At A Much Slower Rate

In a new post on X, the on-chain analytics firm Glassnode has talked about the latest trend in the market cap of the stablecoins. A “stablecoin” is a cryptocurrency that has its price pegged to a fiat currency.

Investors generally store their capital in the form of these assets whenever they want to avoid the volatility associated with assets like Bitcoin. These holders often plan to eventually buy back into the volatile side of the market and when they do, they naturally provide a bullish boost to the price of whatever coin it is that they are swapping into.

As such, the supply of the stablecoins can be looked at as a measure of the available dry powder waiting on the sidelines for BTC and other volatile digital assets. In this view, an increase in the metric would naturally be a bullish sign for the sector.

Now, here is the chart for the market cap of the stables shared by the analytics firm that shows the trend in its value over the last few years:

As displayed in the above graph, the stablecoins have been seeing their combined market cap going up for a while now, suggesting these fiat-tied tokens have been getting capital injections.

Compared to the last couple of months of 2024, however, the metric’s growth rate has today severely declined. The percentage change in the indicator still continues to be positive, but it has come quite close to dipping into the negative region.

The analytics firm explains,

As stablecoins serve as core quote assets across crypto markets, this slowdown adds further evidence of a broad contraction in digital asset liquidity and a more risk-off environment.

From the chart, it’s apparent that a reversal to the downside meant a bear market in full swing for Bitcoin back in 2022. The trend in the stablecoin market cap could thus be to keep an eye on in the near future, to see if a similar reversal would take place for the metric this time as well.

In some other news, the Bitcoin Coinbase Premium Gap has been making some recovery recently, as an analyst has pointed out in a CryptoQuant Quicktake post.

The “Coinbase Premium Gap” keeps track of the difference between the Bitcoin price listed on Coinbase (USD pair) and that on Binance (USDT pair). The metric is currently negative, implying Coinbase users are potentially applying selling pressure relative to the Binance users, but its value has slowly been rising, which can potentially be a positive sign for the asset.

BTC Price

At the time of writing, Bitcoin is trading around $85,300, up over 7% in the last week.