Tether (USDT) Inflows Increase as Stablecoin ‘Fuel’ Drives Crypto Bull Rally

Bitcoin (BTC)’s rise to record highs has lifted the crypto market, and as the year comes to a close, it’s generating strong bullish sentiment for the future.

In context, there has been a significant increase in Tether (USDT) inflows to exchanges. This move in stablecoins aligns with the ongoing crypto bull rally, which has been underway for over two months.

Daily inflows of the USDT to the exchanges

According to the latest data compiled by Santiment, there has been an average net inflow of approximately $40 million USDT per day on cryptocurrency exchanges over the past eight weeks. These entries have acted as critical “fuel” for many historical crypto price bombs, contributing to positive sentiment and liquidity in the market.

With 2024 nearing its final stretch, the continuation of this “dry dust” influx of stablecoins suggests more potential for upside momentum as traders pour funds into cryptocurrencies.

The stablecoin market has matured significantly globally, even surpassing Bitcoin as the preferred asset for everyday transactions, according to the Chainalysis report. Amidst this, new challengers such as Ripple’s recently launched RLUSD are entering the market, with other stablecoins raising their stakes.

Despite several players in the stablecoin market, USDT has emerged as this year’s undisputed heavyweight. 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 held the top spot in trading volumes through 2024.

Potential of Stablecoin

A recent report by Standard Chartered and Zodia Markets predicted that stablecoins could grow from 1% to 10% of US M2 money supply and foreign exchange (FX) transactions. The two companies believe that the utility of stablecoins has expanded beyond cryptocurrency trading to cross-border payments, payroll, trade settlements and remittances.

The report highlighted that stablecoins could address inefficiencies in traditional financial systems, offering faster and cheaper transactions. Regulatory clarity, especially from a possible Trump administration in 2025, is seen as a key factor in unlocking its full potential. In addition, adoption in emerging markets such as Brazil and Nigeria is already increasing, driving greater demand.

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