Bitcoin’s (BTC) rise to record highs has boosted the crypto market, and as the year draws to a close, it’s sparking strong bullish sentiment for the future.
As a backdrop, there has been a significant increase in flows of Tether (USDT) to exchanges. This stablecoin move aligns with the ongoing cryptocurrency bull rally, which has been going on for over two months now.
Daily USDT entries to exchanges
According to the latest data compiled by Santiment, there has been an average net inflow of approximately $40 million USD per day to cryptocurrency exchanges over the past eight weeks. These inflows have acted as essential “fuel” for many of crypto’s historical price pumps, contributing to positive sentiment and market liquidity.
As 2024 approaches its home stretch, the continuation of this “dry powder” influx of stablecoins suggests additional potential for bullish momentum as traders allocate funds to cryptocurrencies.
The stablecoin market has matured significantly globally, even surpassing Bitcoin as the preferred asset for daily transactions, according to Chainalysis’ report. Amidst all this, new challengers like Ripple newly launched RLUSD enters the market, while other stablecoins increase their stakes.
Despite several players in the stablecoin market, USDT has become the undisputed heavyweight this year. A year ago, its supply stood at 90 billion, an impressive growth of 50 billion over 12 months. USDT now controls 66% of the $212 billion stablecoin market and has maintained the top spot in terms of trading volumes throughout 2024.
Stable currency potential
A recent report from Standard Chartered and Zodia Markets predicts that stablecoins could potentially grow from 1% to 10% of the US M2 money supply and foreign exchange (FX) transactions. Both companies believe that the utility of stablecoins has expanded beyond cryptocurrency trading to encompass cross-border payments, payroll, trade settlements and remittances.
The report highlights that stablecoins could address the inefficiencies of traditional financial systems, providing faster and cheaper transactions. Regulatory clarity, particularly from a possible Trump administration in 2025, is seen as a key factor in unlocking their full potential. Additionally, adoption in emerging markets like Brazil and Nigeria is already on the rise, driving demand.
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