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The total supply of stablecoins has surged in recent weeks, coinciding with a significant rally in the price of Bitcoin (BTC), on-chain data shows.
The growth in stablecoin supply has followed an extended surge in the broader crypto market that started after a false report on October 16 said a spot Bitcoin exchange-traded fund (ETF) had been approved in the US.
Around the same period, on-chain data revealed a substantial rise in the supply of stablecoins, with a significant portion being minted in the form of Tether (USDT).
According to on-chain analytics firm Glassnode, the surge in the total stablecoin supply is a strong indicator of net capital inflow into crypto.
In its latest The Week On-chain report, Glassnode highlighted this, saying that stablecoins typically reflect investors’ “demand for speculative capital.
The data also revealed a breakthrough above Glassnode’s Altseason Indicator, illustrating upward trends in three key assets: BTC, Ether (ETH), and the combined stablecoin market.
According to the report, Bitcoin is leading the way in net capital inflow, and, until just recently, stablecoins had experienced net outflows.
At present, however, both BTC, ETH and stablecoins are in positive territory, showing overall increases as measured in US dollars and reflecting a growing interest in crypto among investors.
Bitcoin outperforming
Meanwhile, the report also noted that most altcoins have underperformed Bitcoin by a significant margin this year, leading to a continued rise in the Bitcoin dominance.
This was also pointed to by Glassnode in an X post where it said BTC has outperformed altcoins by 300% in 2023:
We explore these dynamics through the lens of price performance, drawdown magnitude, and indicators of capital rotation.
What we find is that whilst the altcoin sector is outperforming many fiat currencies, $BTC is outperforming altcoins by 300% in 2023.https://t.co/Tt8EoJ5WS6
— glassnode (@glassnode) November 1, 2023
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