According to CryptoQuant’s latest report, stablecoin liquidity has surpassed a new record, thanks in large part to Tether and Circle. Ripple entered this space with its new RLUSD token.
Rising activity for stablecoins on centralized exchanges suggests bullish activity for Bitcoin.
Tether and Circle dominate the stablecoin market
The report specifically emphasizes its bullish outlook, claiming that stablecoin liquidity has reached new heights.
“Cryptocurrency market liquidity, as measured by stablecoin value, hit an all-time high in late September. “Increasing stablecoin market capitalization typically correlates with rising prices of Bitcoin and cryptocurrencies by increasing market liquidity,” the CryptoQuant report claimed.
Read more: What is a stablecoin? A beginner’s guide
Total market capitalization of stablecoins. Source: CryptoQuant
In this report, we specifically focused on Tether (USDT) and Circle (USDC) for obvious reasons. These two assets, especially USDT, have overwhelming control over the stablecoin market. Remarkably, these large companies alone account for over 90% of the stablecoin market capitalization.
The growth of these assets on centralized exchanges is particularly reassuring to the market. Stablecoins are frequently used as intermediaries for Bitcoin purchases on cryptocurrency exchanges, and their increased liquidity is positively correlated with rising Bitcoin prices.
USDT Reserve on Cryptocurrency Exchange. Source: CryptoQuant
Ripple’s new challenger
Still, these two assets may face challenges to maintain their dominance. The EU’s new stablecoin regulations in particular threaten Tether’s control over the European market, which could represent a huge opportunity. Ripple has already been planning to issue its own stablecoin for several months, and began minting the new RLUSD in late September.
Read more: A guide to the best stablecoins of 2024
RLUSD has grown to a market cap of $47 million and operates on both Ethereum and Ripple’s XRPL networks. Furthermore, further analysis shows that RLUSD is particularly well-suited to XRPL. This includes a large amount of US dollar and Chinese yuan traffic and remittance infrastructure.
It is currently unclear how successful RLUSD will be in entering the stablecoin market. However, by focusing on EU stablecoin regulation, it has the potential to gain significant market share.
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