As Ripple tests the waters with its new stablecoin project, the broader crypto market is currently experiencing a surge in liquidity, particularly driven by stablecoins.
Notably, Ripple is set to enter the stablecoin space with the introduction of Ripple USD (RLUSD) in the coming weeks. Ripple President Monica Long confirmed that the project would launch this year.
Currently in beta testing, millions of RLUSD tokens have been created and burned on the XRP Ledger and Ethereum blockchain networks.
Ripple’s stablecoin seeks to target the growing demand in the stablecoin market, seeking to offer greater liquidity and efficiency. This growing demand for stablecoins is evident in the increased liquidity in the market.
According to CryptoQuant’s latest weekly report, at the end of September 2024, the total market capitalization of major USD-backed stablecoins reached $169 billion. This represents a 31% increase year to date, adding $40 billion in liquidity to the market.
Stablecoins like Tether (USDT) and USD Coin (USDC) continue to lead the charge, playing an important role in strengthening the overall liquidity of cryptocurrencies.
Tether’s USDT, the largest stablecoin by market capitalization, has increased by $28 billion since the start of the year, reaching $120 billion. This growth comes despite regulatory challenges related to MiCA, as Coinbase considers delisting the asset from the EU.
USDT’s $120 billion valuation gives it a dominant 71% share of the stablecoin market. Meanwhile, Circle USDC, which is fully MiCA compliant, follows with a market cap of $36 billion, representing a 44% increase in 2024. Ripple previously confirmed that its upcoming RLUSD will be compliant to the regulations.
This increase in stable liquidity has a notable impact on centralized exchanges. USDT balances on these platforms have reached an all-time high, with $22.7 billion held on the Ethereum network, a growth of 54% since the start of the year.
Additionally, $8.5 billion worth of USDT exists on centralized exchanges through the TRON network. Larger stablecoin reserves on exchanges often correlate with higher prices for Bitcoin (BTC) and other cryptocurrencies.
However, despite this influx of liquidity, the price of Bitcoin has remained relatively stable, even though USDT balances on exchanges have increased by 20% since August 2024.
