- Between August and September, stablecoin capitalization increased by $8.73 billion, signaling a bullish trend.
- Institutional investors are converting funds into stablecoins in light of the Federal Reserve’s monetary policy easing cycle.
- The CEO of Tether described USDT and the dollar as “friends.”
The rise in stablecoin capitalization during August and September could extend the upward trend of Bitcoin and other major cryptocurrencies, according to CryptoQuant.
Analysts explained that stablecoins serve as the “circulatory system” of the digital asset market.
They observed a high correlation, over 90%, between Bitcoin’s price and the net inflow of stablecoins to centralized platforms since September 10 — more than 90%.
In an interview with The Block, experts noted that the USDT balance on CEX reached a record $22.5 billion.
Stablecoin capitalization stands at $172.75 billion, having increased by $8.73 billion over two months.
Matrixport concurred with these findings. Experts emphasized that the total market value of stablecoins has returned to the peaks of March-April 2024, which can be seen as a bullish signal for all cryptocurrencies.
#Matrixport Today ? — Oct 1: Surge in #Stablecoin Minting Signals Bullish Momentum for #Bitcoin as Institutional Confidence Grows#cryptomarket #MarketTrends #MarketInsights #BTC pic.twitter.com/mxcMjID5IA
— Matrixport Official English (the only official X) (@Matrixport_EN) October 1, 2024
Analysts recalled that similar conditions for a “powerful rally” in Bitcoin emerged in February 2024.
“Following the Federal Reserve meeting on July 31, the issuance of stablecoins accelerated. This reflects growing institutional investor confidence in a key rate cut,” specialists indicated.
In an interview with CoinDesk, Tether CEO Paolo Ardoino stated that USDT is finding use in countries with high inflation and inadequate financial infrastructure.
In nations like Turkey and Argentina, the token has become a “lifeline,” freeing the population from the need to seek dollars on the black market, he added.
The top executive highlighted the company’s role in purchasing US Treasuries amid waning interest from China. Ardoino estimated that Tether has acquired US government bonds in amounts comparable to Germany.
“USDT and Tether are the best friends of the US dollar,” the entrepreneur explained.
The days when the issuer had to “wander,” opening accounts in banks and facing closures worldwide — from Qatar to China, Taiwan, and Canada — are over. Now, most of the backing is managed by Cantor Fitzgerald, Ardoino noted.
The interview echoes Tether Limited’s statements in a “manifesto” to critics from the consumer advocacy group Consumers’ Research. The latter accused the firm of lacking transparency regarding its US dollar reserves, drawing parallels to the situation that led to the collapse of FTX and Alameda Research.
At that time, the company described its managed stablecoin as a “cornerstone in modern financial ecosystems” and reiterated its commitment to consumer protection and regulatory compliance.
Subsequently, Cyber Capital founder Justin Bons questioned Tether’s transparency and business structure.
In September, according to CCData, issuers of the top five stablecoins by capitalization are expected to lose approximately $625 million in annual revenue due to the Federal Reserve’s 50 basis point key rate cut.