Glassnode Speculates BTC Rally as stablecoins supply hits Record High

The supply of Binance USD, DAI, Tether, and USD Coin has reached a record high. The stablecoins now have a combined valuation of over $78 billion.

The increasing supply for the top four stablecoins is expected to cause another bullish rally for Bitcoin and the entire crypto market. The combined market capitalization for Binance USD (BUSD), DAI, Tether (USDT), and USDC has increased from $27 billion to approximately $78 billion, which depicts a 190% growth.

Surging supply of Stablecoins

In a weekly on-chain report released by Glassnode on May 3, Tether maintained its leading position among stablecoins. The token represents two-thirds of the entire value of the top four stablecoins.  As a stable tokens leader, Tether hit an all-time high in total minted supply, with $51.78 billion being recorded at the end of April. This is a 3% growth or $1.48 billion increase from what was reported the previous week.

Since the past seven days, USD Coin has also surged by around $1 billion, with the current market capitalization for the stablecoin currently standing at $14.5 billion. BUSD has also been doing well, with its circulating supply hitting a record high of $7.8 billion on May 3. The circulating supply of DAI is also at an all-time high of $3.9 billion.

Stablecoin Supply Ratio

With the increasing supply for stablecoins increasing, the Stablecoin Supply Ratio (SSR) is reducing. SSR is used to analyze Bitcoin’s supply relative to that of Stablecoin. The SSR is currently sitting at a low of 13.4, and this is expected to reduce further to reach 9.6.

An SSR chart provided on Glassnode’s report shows that the SSR has been low in 2020 and 2021. This is attributed to the rising supply of stablecoins in circulation. The supply for stablecoin has also increased, causing a rise in Bitcoin prices.

Glassnode states that a low SSR value is a sign that the combined global value of stablecoin will surpass the market capitalization of Bitcoin. This supply also shows an increasing purchasing power of crypto-native tokens that can speedily be converted and traded for Bitcoin and other cryptocurrencies.

One of the factors causing an increased supply for stablecoin is institutional adoption. Aave launched a liquidity mining program on April 27 that increased the demand for stablecoin, given that it targeted investors who staked in DAI, USDC, and USDT. Aave’s yield farming has also impacted stablecoins by increasing borrowing volumes that have doubled since the launch of the liquidity mining initiative.