According to DefiLlama data, the total supply of stablecoins increased by $2.135 billion in the past week, reaching a record supply of $236.6 billion.
The sustained inflow of stablecoins indicates rising liquidity, which can be seen as dry powder ready to enter risk assets like Bitcoin [BTC] and altcoins.
Historically, increases in stablecoin supply often precede market rebounds, as they reflect enhanced purchasing power for altcoins and BTC.
Bitcoin rose 10%, with bullish momentum continuing.
Driven by a strong rebound from key technical support zones, Bitcoin surged 10% in the past week to $93,000.
Market sentiment for BTC remains bullish, with participants currently targeting the psychological level of $100,000. This rally is not just technical; the continuous influx of capital has also played a supportive role.
The negative correlation between BTC and stablecoin supply also supports the view that more investors are diversifying their portfolios and holding bullish positions in Bitcoin.
The altcoin market is following in Bitcoin's footsteps.
The broader altcoin market has not lagged behind either. Since bouncing from the weekly demand zone, the total market capitalization of altcoins has soared by 16% on the weekly chart.
At the time of writing, the total market capitalization of altcoins, excluding Ethereum [ETH] and BTC, is $821 billion.
In fact, the strong rebound reflects Bitcoin's strength and emphasizes the altcoin market's dependence on BTC's directional preference.
While altcoins may initially lag, they often catch up once Bitcoin stabilizes or consolidates. Current trends suggest that if BTC maintains its momentum, altcoins may be poised for a stronger rally.
Market sentiment has turned bullish.
With Bitcoin's leading position and stablecoin reserves reaching record levels, overall market sentiment is turning bullish. Market participants are becoming more active, and the rotation of capital into crypto assets is accelerating.
As Bitcoin surges toward $100,000, altcoins seem ready to ride the second wave.
That said, the interplay between stablecoin inflows, Bitcoin's dominance, and altcoin activity will be crucial in the coming weeks.
If past cycles repeat, the current pace may signal the beginning of a broader altcoin rebound—thriving in the shadow of Bitcoin's dominance.
