The cryptocurrency market has witnessed record highs in US dollar-indexed stablecoins and a significant increase in large Bitcoin (BTC) 
$91,967 transactions, which may pave the way for a broader rally in the coming weeks. This scenario could maintain the positive seasonal trend typically observed in October, a month historically known for Bitcoin’s strong performance.
Link Between Stablecoin Liquidity and Bitcoin
As of the end of September, stablecoin liquidity surged to a record $169 billion, marking a 31% increase since the beginning of the year. According to CryptoQuant, this growth was primarily driven by major stablecoin players such as Tether‘s USDT and Circle’s USDC. USDT’s market cap rose by $28 billion to approximately $120 billion, maintaining a 71% market share, while USDC’s market cap increased by 44% to $36 billion, holding a 21% market share.
Stablecoins are known to be pegged to fiat currencies like the US dollar or assets like gold, aiming for price stability. They are backed by an equivalent amount of fiat currency, thus increasing the real money entering the cryptocurrency market.
A significant portion of crypto spot and futures trades occur through stablecoin trading pairs, and the increase in stablecoin supply indicates potential liquidity for crypto purchases. Historical data shows a clear correlation between the amount of stablecoins held on exchanges and Bitcoin prices, with stablecoin balances on exchanges increasing by 20% this year.
Commenting on this, CryptoQuant’s Research Director Julio Moreno stated, “The increase in stablecoin balances on exchanges is positively correlated with the prices of Bitcoin and other cryptocurrencies. Since the start of the current bull cycle in January 2023, the total USDT (ERC20) amount on exchanges has risen from $9.2 billion to $22.7 billion, a 146% increase.”
Future Expectations for Bitcoin
Since the beginning of October, Bitcoin has declined by over 6%. Historically, it has recorded only two negative closures in October. However, typically after October 15, prices may rise by as much as 16%, and the current accumulation of stablecoins could support this increase.
In the coming months, key factors such as the US presidential elections, central bank monetary policies, and cryptocurrency regulations will play a vital role. Chain analytics firm Santiment reported an increase in transactions from large asset holders, known as whales, on the Bitcoin network. According to Santiment, such activities historically precede price increases, adding, “Metrics on our network indicate a revival of significant dormant activity in the Bitcoin network, with an on-chain volume of $37.4 billion, the highest in the last seven months.”
