The rise of stablecoin liquidity has slowed down, but exchange reserves have reached a new high, and the market may enter a consolidation phase.

CryptoQuant's latest analysis shows that although the liquidity of stablecoins continues to expand, the growth rate has significantly slowed down. The weekly market capitalization growth of stablecoins has dropped to about $1.1 billion, far below the inflow level of $4-8 billion per week expected by the end of 2024. However, the reserves of stablecoins on exchanges reached a historical high of $68 billion on August 22, indicating that a large amount of funds is still waiting off-market to get on board. The market may shift from a rapid rise to a consolidation phase, and investors need to adapt to a more moderate growth pace.

[The growth rate of stablecoins slows down, and market liquidity support weakens]

According to a report by CryptoQuant, the weekly expansion of stablecoin market capitalization has decreased to about $1.1 billion, in stark contrast to the large inflows of $4-8 billion per week at the end of 2024. At that time, the influx of substantial funds provided key momentum for the rapid rise of Bitcoin.

As the dominant stablecoin, Tether (USDT) has seen a slowdown in its 60-day growth scale, currently maintaining around $10 billion, down from the peak of $21 billion earlier in this cycle. Although the overall data remains positive, it clearly reflects that the inflow of funds is cooling off.

[The exchange's stablecoin reserves hit a record high, providing ample "ammunition" for the market]

Despite the slowdown in the issuance of stablecoins, the reserves of stablecoins at exchanges show a different picture. On August 22, the total reserves of stablecoins at exchanges reached $68 billion, a record high, surpassing the previous peak in February 2022.

Among them, Tether (USDT) accounts for $53 billion, followed closely by USD Coin (USDC) at $13 billion. This funding provides ample liquidity for market activities, indicating that traders and institutions continue to hold significant amounts of capital on exchanges, possibly preparing for potential market opportunities.

[Mainstream CEX maintains the leading position of altcoin and stablecoin deposits]

Mainstream CEXs continue to maintain a leading position in the altcoin trading sector, with their altcoin deposit activity far exceeding that of other exchanges. During the peak of the altcoin rebound in November-December last year, mainstream CEXs processed as many as 59,000 deposits in a single day, more than double that of Coinbase (about 26,000) and also surpassing the total of all other exchanges combined (about 24,000).

Even during calm market periods, mainstream CEX still maintains about 13,000 daily transactions of altcoin inflows, higher than Coinbase's 6,000 and the average of 10,000 on other platforms.

[Market Outlook: Consolidation Replaces Broad Rise, Investors Need to Stay Patient]

CryptoQuant points out that there is a divergence in the current market, with a slowdown in the market capitalization growth of stablecoins and a record high in exchange reserves. On one hand, the slowing issuance growth indicates a lack of significant new capital inflows to drive the market; on the other hand, the large reserves of stablecoins in exchanges show that the market still possesses strong purchasing power.

This environment may be more conducive to market consolidation and individual asset rises, rather than a comprehensive and significant rise. Unless the issuance of stablecoins accelerates again, the market may enter a phase dominated by structural and individual stock trends. Investors should maintain patience at this time and adapt to a more moderate growth pace.

[Conclusion]

The slowdown in stablecoin liquidity growth coincides with record reserves at exchanges, reflecting that the market is in a transitional period. A large amount of capital is waiting to get on board, providing support for the market, but the lack of new capital inflows may limit the overall rise. Investors should pay attention to individual assets with ample liquidity and good fundamentals, while being cautious of the overall market volatility risk. Until stablecoin issuance shows a significant rebound, the market is more likely to present structural opportunities rather than a full-blown bull market.