As Bitcoin (BTC) stabilizes around the $70,000 mark, investors and analysts are actively discussing the potential drivers that could elevate market prices. Ki Young Ju, the founder and CEO of CryptoQuant, recently shared insights indicating that, despite the ongoing increase in stablecoin supply, the volume is insufficient to significantly enhance buy-side liquidity and propel BTC prices upward.
Ju highlighted the current Bitcoin-to-Stablecoin Exchange Reserve Ratio—a metric that compares Bitcoin reserves on exchanges to stablecoins—which reveals that the amount of BTC held on exchanges is roughly six times greater than that of stablecoins.
In his analysis, Ju pointed out that stablecoin reserves were valued at $30 billion in September 2021. Presently, the total market capitalization of stablecoins stands at approximately $166 billion. However, a mere 21% of these stablecoins are currently held on exchanges for trading, a stark contrast to 2021, when over 50% of the total stablecoin supply was available on exchanges.
Ju contended that, although the supply of stablecoins is increasing, their primary usage in the current market cycle is shifting away from trading.
Stablecoins as a Means of Value Preservation
Ki Young Ju observed a rising trend of stablecoins being utilized as a means of preserving value or for remittances. According to Chainalysis, more than 50% of the remittances sent to countries like Venezuela, Argentina, Brazil, Colombia, and Mexico during 2022-2023 involved stablecoins used for value storage.
This trend is evident across various regions experiencing high inflation, including Turkey, which Chainalysis identified as having the highest rate of stablecoin purchases relative to its gross domestic product (GDP).
The Importance of ETF Flows and Coinbase USD Liquidity
Ju concluded that liquidity derived from digital asset exchange-traded funds and US dollar liquidity from Coinbase will be “crucial” for supporting market stability in the coming months. Similarly, WonderFi CEO Dean Skurka emphasized that robust ETF inflows signal strong and sustainable institutional interest in Bitcoin.
Skurka argued that this institutional enthusiasm, combined with macroeconomic factors in both the United States and Canada, could serve as positive catalysts for the price of this scarce decentralized asset.