Bitcoin’s (BTC) rise to record levels has boosted the cryptocurrency market and as the year ends, it is generating strong bullish sentiment for the future.
For context, there has been a significant increase in Tether (USDT) inflows to exchanges. This stablecoin move aligns with the current cryptocurrency bull rally, which has been underway for over two months.
Daily USDT inflows to exchanges
According to the latest data Compiled by Santiment, there has been an average net inflow of approximately $40 million per day USDT to cryptocurrency exchanges over the past eight weeks. These inflows have acted as fundamental “fuel” for many historical cryptocurrency price increases, contributing to positive sentiment and liquidity in the market.
With 2024 approaching its home stretch, the continuation of this “dry powder” influx of stablecoins suggests greater 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. In the midst of this, new challengers like Ripple just released RLUSD is entering the market and other stablecoins are raising their bets.
Even though there are several players in the stablecoin market, USDT has emerged as the undisputed heavyweight this year. A year ago, its supply was 90 billion, an impressive growth of 50 billion in 12 months. USDT now controls 66% of the $212 billion stablecoin market and has maintained the top spot in trading volumes through 2024.
Stablecoin potential
A recent report from Standard Chartered and Zodia Markets predicted that stablecoins could potentially grow to 1% to 10% of the US M2 money supply and foreign exchange (FX) transactions. The two companies believe that the usefulness of stablecoins has expanded beyond cryptocurrency trading to cross-border payments, payroll, trade agreements and remittances.
The report highlighted that stablecoins could address the inefficiencies of traditional financial systems, offering faster and cheaper transactions. Regulatory clarity, particularly from a possible Trump administration in 2025, is seen as a key factor in unlocking its full potential. Additionally, adoption in emerging markets such as Brazil and Nigeria is already increasing, driving greater demand.
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