The cryptocurrency market has seen an impressive surge in stablecoin liquidity, with the USDT market cap alone expanding by a remarkable $5.75 billion within the last 60 days. An analysis by CryptoQuant, posted on March 13, highlights that this increase significantly surpasses the 60-day simple moving average of $3.46 billion. The stablecoin market, in general, has not been left behind, registering an 11% growth from $203.9 billion to $226.1 billion within the same timeframe.
Historically, inflows of this nature into stablecoins have indicated an influx of new liquidity into the cryptocurrency market, often setting the stage for rebounds in Bitcoin’s (BTC) price.
Data from Santiment supports this trend, revealing a six-month high in Tether’s (USDT) on-chain activity, with over 143,000 wallets making transfers on March 11 alone. The observation made by Santiment proposes that these spikes in stablecoin activity, particularly during market downturns, usually precede market recoveries. Therefore, this surge could signal traders positioning themselves for a potential market turnaround.
While Bitcoin’s short-term price action remains volatile, many analysts believe that the influx of liquidity could stimulate a market-wide recovery. Bitcoin, which fell nearly 30% from its all-time high of $109,000 in January, is currently trading at around $81,712.
CryptoQuant’s market analysis on March 12 suggests that Bitcoin may be nearing oversold territory, which historically precedes price recoveries. The share of Bitcoin held for less than a month increased to 23% in March, mirroring a similar spike in December 2024. On both occasions, Bitcoin’s price underwent a correction, bringing the Market Value to Realized Value (MVRV) ratio down to 1.8, near its 2024 low of 1.71.
The MVRV ratio is a tool used to assess whether Bitcoin is overvalued or undervalued by comparing its market price to the average purchase price of all coins. If Bitcoin’s price falls to the $70,000 range, the ratio could align with previous cycle lows, potentially signaling a price rebound.
However, market sentiment remains cautious. According to Santiment, large Bitcoin holders, those with wallets holding between 100 to 1,000 BTC, have sold off more than 50,600 BTC in the past week, representing a sell-off of approximately $4.07 billion.
Despite these pressures, the number of Bitcoin holders remains close to its all-time high of 54.72 million, suggesting that the network continues to grow. The ability of Bitcoin to handle selling pressure, while also benefitting from increasing liquidity and historical recovery patterns, will be instrumental in determining the market’s next direction.
