Stablecoins on Exchanges Reach Three-Year High as Altcoin Market Capitalization Continues to Decline

Stablecoins on exchanges are often seen as a key indicator of investors' purchasing power. A higher stablecoin balance suggests traders are ready to buy altcoins

Crypto traders use on-chain data to identify buying opportunities, especially in the lower time frames. Among the key indicators that traders monitor closely are stablecoin balances on exchanges. A higher stablecoin balance suggests traders have more capital at their disposal to purchase altcoins, setting the stage for a potential market recovery.

According to CryptoQuant, the total value of ERC-20 stablecoins on exchanges reached $46.5 billion at the start of 2025. As of press time, this figure stands at $44 billion.

The data has led investors like The DeFi Investor to believe that the capital is readily available to fuel a market rebound.

“Stablecoin CEX reserves are at an all-time high. There’s a lot of capital waiting to be deployed. But we need the macro situation to improve first,” The DeFi Investor remarked.

However, a closer look at the data from CryptoQuant reveals that while the total value of stablecoins on exchanges is indeed high, most of these funds are held on derivatives exchanges.

Of the $44 billion in ERC-20 stablecoins on centralized exchanges (CEXs), an astounding $43.8 billion is in the possession of derivatives exchanges. In contrast, spot exchanges currently hold a mere $220 million in stablecoins.

To put this into perspective, from July 2023 to March 2024, a surge in spot exchange stablecoin reserves coincided with the market capitalization incrementally increasing from $1 trillion to $2.7 trillion.

But today, spot exchange reserves have dropped to a three-year low.

It is important to note that most stablecoins on derivatives exchanges do not directly contribute to sustainable price increases. Instead, they reflect short-term leveraged trading, which carries a high risk of liquidation.

BeInCrypto previously reported that 334,404 traders were liquidated in the past 24 hours, resulting in a total of $947.7 million in liquidated positions. Among them, Long positions suffered the most significant losses.

Furthermore, the altcoin market capitalization (TOTAL2) experienced a 20% decline in March alone, plummeting from $1.2 trillion to below $1 trillion.

Stablecoin Market Cap Hits New High Amid Rising Adoption

According to Ignas, co-founder of Pink Brains, the stablecoin market capitalization has surged by 44% over the past two years, surpassing $200 billion.

Historically, a growing stablecoin supply signaled the start of an Altcoin Season. However, Ignas believes the narrative in 2025 is different.

“Until recently, an increase in stablecoin supply led to a pump in crypto prices, as stablecoins were mostly used for short-term holding between trades. Now, stablecoins are growing beyond speculation,” Ignas noted.

He highlighted several real-world use cases that extend beyond crypto trading. For instance, SpaceX is processing Starlink sales in Argentina and Nigeria using stablecoins.

ScaleAI, a leading AI company, pays its employees in foreign countries with stablecoins.

Moreover, major TradFi institutions are preparing for the expansion of stablecoins in 2025. Bank of America is open to launching its own stablecoin if the regulatory climate permits it.

PayPal also has plans to expand the adoption of PYUSD in 2025. Recently, Stripe acquired Bridge, a stablecoin platform, for $1.1 billion.

Revolut is currently considering issuing a stablecoin, and Visa is focused on integrating stablecoins into its global payments and treasury operations.