Stablecoin market rises against the trend: ERC-20 supply reaches an all-time high, becoming a key liquidity indicator in the crypto market.

Key Points:

• Stablecoin supply surpasses $121 billion ( all-time high )
• Circle (USDC) shows strong market performance ( stock price soared 167% after IPO )
• The dominance rate of stablecoins stabilizes at 7.9%, reflecting a neutral and cautious sentiment in the market.
• On-chain data reveals signals of liquidity recovery, which may serve as a catalyst for the next phase of the bull market.

1. Stablecoins: Safe Haven and Growth Engine in Turbulent Markets

As Bitcoin struggles to break through its historical high and altcoins seek solid support, the stablecoin sector of the cryptocurrency market continues to expand. Since the start of this bull market cycle, the stablecoin market has demonstrated stable growth, solidifying its reputation as one of the most reliable and scalable use cases in the crypto space. Unlike highly volatile crypto assets, stablecoins provide crucial stability, liquidity, and utility in the areas of DeFi (decentralized finance), trading, and settlement.

2. ERC-20 Stablecoin Supply Hits Record High: $121 Billion

Analyst Darkfost's latest data reveals a key trend: the total supply of ERC-20 stablecoins is regaining momentum, reaching a historic peak of 121 billion USD today. This milestone is significant as it indicates that while other areas of the market seem stagnant, new demand and liquidity are flowing into the crypto ecosystem.

Analysis of Stablecoin Supply Growth:

• On-Demand Minting: Increased supply directly reflects user demand and new funds flowing into the crypto market.
• Meeting Demand: Supply expansion has met the needs of protocols and exchanges facing increased user activity and increased capital inflows.
• Market Sentiment Signals: If supply continues to grow, it may indicate an increase in market risk appetite and greater willingness for capital deployment.

3. Circle (USDC) Successfully Listed: Verifying Stablecoin Business Model

Stablecoins have become one of the most influential innovations in the crypto space, bridging a critical gap between traditional finance (TradFi) and DeFi. This narrative received a significant boost in June this year when stablecoin issuer Circle (NASDAQ: CRCL) successfully went public on the New York Stock Exchange. Circle's IPO was priced at $31 per share, far exceeding expectations—with the closing price on the first day reaching $82.84, an increase of 167%. Currently, CRCL's stock price is close to six times its IPO price, bringing the company a market capitalization of about $42 billion, strongly validating the viability of the stablecoin business model and market confidence.

4. Stablecoin Dominance Analysis: 7.90% Neutral Positioning

The weekly chart shows that the current stablecoin dominance (Stablecoin Dominance) remains at 7.90%. This level reflects the market's cautious yet ongoing interest in cryptocurrency liquidity reserves.

• Historical Review: During the risk-averse period from 2020 to mid-2022, the dominance rate surged sharply to a peak of over 16%. Subsequently, as the bull market risk appetite shifted towards Bitcoin and altcoins, the dominance rate gradually decreased.
• Current Situation: Since the beginning of 2024, the dominance rate has stabilized between 7% and 10%, indicating a more balanced market environment.
• Technical Indicators: The current level is slightly above the 50-week moving average (7.76%) and the 100-week moving average (8.02%), indicating strong level support. The 200-week moving average (9.30%) constitutes long-term resistance.

Implied Market Signals of Dominance Rate:

• Neutral Stance: Market participants are neither fully Risk-On (Risk-On) nor fully Risk-Off (Risk-Off).
• Potential Direction: If the dominance rises from here, it may indicate:
  • Panic sentiment intensifies (capital fleeing volatile assets).
  • Or new liquidity inflow (especially when accompanied by a simultaneous increase in stablecoin supply - as demonstrated by the current trend of ERC-20 stablecoins).

5. Summary: Stablecoins - Potential Catalysts for the Next Market Cycle

The growth of stablecoin supply highlights the resilience and core importance of this sector. While speculative tokens face resistance, stablecoins continue to thrive due to their utility value and widespread adoption. Whether used for hedging risks, executing DeFi yield strategies, or conducting capital transfers, their fundamental role in the crypto ecosystem is irreplaceable.

Key Signal:

• As the broader market awaits a directional decision, the quiet increase in the supply of stablecoins may be an early signal of the market regaining momentum.
• If the supply of stablecoins continues to expand, it is likely to become an early catalyst for the next major phase of the cryptocurrency bull market cycle.

Conclusion: The story of stablecoins is far from over – in fact, it may just be beginning.