Stablecoins Are Increasingly Driving Bitcoin's Price Movements, New Data Confirms

Recent market data confirms that the increasing role of stablecoins is leading to the development of Bitcoin's price movements.

Recent market data confirms that the increasing role of stablecoins is leading to the development of Bitcoin's price movements. Despite Bitcoin price peaks, stablecoins, mostly USDC and USDT, stay dominant and line up with previous market tops seen in March of 2024 and even back in 2021.

A Stablecoin Supply Ratio (SSR) Oscillator is being closely monitored by analysts and hasn't yet tipped off a strong Bitcoin accumulation pattern despite price corrections.

Stablecoin Supply Growth and Bitcoin Price Influence

The stablecoin supply has exceeded $221 billion which represents more than 1% of the U.S. dollar M2 money supply. Stablecoins have gained substantial ground in worldwide liquidity patterns through their significant $100 billion value increase since 2024.

USDT controls the stablecoin market but its market domination has decreased to 64% from 73%. USDC stablecoin has become more popular and its share of the market now stands at 25% while still maintaining an initial 20% level. The stablecoin market receives additional diversity from new market entrants Ethena's USDe and Usual's USD0.

Bitcoin and Stablecoin Liquidity Trends

Bitcoin's market capitalization hasn't yet been recorded as meaningfully below the total stablecoin supply by the SSR Oscillator, a tool designed to measure this. Bollinger Bands are household oscillator which highlights deviations, where historically low levels were the indicator of strong accumulation phases.

At the moment, Bitcoin has still not moved into the lower buying zone, which would suggest that it is not yet at an ideal accumulation level. If Bitcoin's price begins to approach its previous peaks and stablecoin dominance continues to rise traders may view this as a warning sign that it is a reversal of the trend.

Crypto Crime and the Shift to Stablecoins

Recent report reveals that about $40 billion was transacted in illicit cryptos in 2024 and it could rise to as much as $51.3 billion after all data is parsed. Bitcoin was previously the coin of choice for illicit activity, but now stable coins are taking the lead.

In 2021 Bitcoin was responsible for almost 70% of illegal transactions. But stablecoins are now the dominant force, accounting for 63% of illicit transaction volume, as bitcoin’s chunk has shrunk to 20%. While the increasing use of stablecoins for both legal finance and illegal practices may make them a preferred option for money laundering in that the coins are considered stable and supposedly regulated, analysts say.

Will Bitcoin Face A Major Reversal?

The influence on Bitcoin's price of stablecoins appears increasingly obvious as they expand enough to set the pace. Rising stablecoin reserves and SSR levels to historical highs mean that if historical trends hold, Bitcoin's next market top is nigh.

Stablecoin movements and SSR trends will be watched closely from traders to further give more confirmation of how Bitcoin will move. If the accumulation signals appear, that may signify another buying opportunity, but if stablecoin dominance continues, Bitcoin's up move might stall.

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.