Bitcoin rallies above $97K following a surge in stablecoin inflows

Bitcoin (BTC) rose above $97,000 on Friday as the top cryptocurrency looked set to recover the $100,000 level heading into the weekend. The rise was fueled by increased inflows into the stablecoin market last week, particularly from USDT and USDC, which added $2.5 billion and $1.2 billion to their market caps, respectively.

Bitcoin rallies as stablecoin market sees fresh inflows

The stablecoin market cap saw a 2.2% gain in April, rising to $238 billion. The rise was fueled by USDT and USDC inflows in the past month.

The leading stablecoins saw a surge in their market cap in the past week alone. USDT's market cap increased by $2.5 billion, while USDC saw a $1.2 billion rise.

USDC's market cap grew 3.07% to a record $62.1 billion in April, pushing its market share to 26.0% — the highest level since February 2023, according to CoinDesk stablecoin report.

On the other hand, USDT's market cap climbed 2.26% to $148 billion, marking its twentieth straight monthly rise. Its market share also saw a modest rise from 61.8% to 61.9%, while its trading dominance on centralized exchanges reached 75.2% of total stablecoin volume.

The surge in stablecoin liquidity indicates a strong flow of capital into the crypto market. Historically, rising stablecoin market caps have aligned with Bitcoin price gains, reflecting greater liquidity and capital availability. The recent growth in USDT and USDC reinforces this trend, supporting upward pressure on Bitcoin, according to a Friday report by CryptoQuant.

"The 30-day expansion in USDT and USDC market cap is now above trend again, an indicator historically associated with rising Bitcoin prices," CryptoQuant stated.

Bitcoin rose above $97,000 early on Friday amid a slight recovery in the crypto market over the past week.

Long-Term Holders (LTH) have accumulated 254K BTC at an average price of $95K since the recent low, signaling strong conviction and minimal de-risking, according to Glassnode.

In addition, Glassnode highlighted that Short-Term Holders (STH) who have held BTC for over a month have returned to profit. A continuation of this trend could reduce selling pressure from older STHs and signal the early stages of a bullish trend.

BTC Euphoria Zone. Source: Glassnode