The latest weekly report from CryptoQuant shows that the liquidity of stablecoins has reached a new high of $220 billion. This increase is due to the market capitalization of Tether (USDT) and USD Coin (USDC) rising, driving capital flows into the broader cryptocurrency ecosystem.

Bullish Indicator for BTC

According to the report on April 30, the market capitalization of USDT increased by $2.5 billion, while USDC rose by $1.2 billion in the past week. Together, both have increased by $3.7 billion in market capitalization, marking the strongest weekly growth in stablecoin supply since February 9.

In the past 30 days, these figures have increased even further. USDT has risen by another $5.3 billion while USDC surged by $6 billion during the same period. Both stablecoins are expanding above their 30-day moving averages.

Historically, this pattern coincides with periods of increased liquidity and stronger performance in the cryptocurrency market overall. Specifically, this trend is a bullish indicator for Bitcoin (BTC).

Market sentiment has also improved with these liquidity changes. The Bitcoin Bull Score, which tracks investor sentiment and market strength, has risen from 20 weeks ago to 50 this week, with the new score bringing the market into neutral territory.

According to the analytics firm, the increase in metrics indicates the impact of rising stablecoin liquidity on Bitcoin's recent movement surpassing key resistance levels on-chain. However, the index remains below 60, a level typically associated with sustained bullish rallies.

This leading cryptocurrency has rebounded strongly over the past three weeks, rising more than 25% from a low of under $74,000 on April 9 to over $96,500 at the beginning of May.

On the other hand, Bitcoin supporter Robert Breedlove recently pointed out that the average mining cost is a potential sign that this asset is nearing the beginning stage of a bullish rally. He noted that this metric, often regarded as the market's breakeven point, has historically marked cycle bottoms and suggests that prices may have bottomed out.

USDT Declines, USDC Hits Record High on Exchanges

Despite reaching record levels, USDT liquidity on cryptocurrency exchanges has not fully recovered. The total amount of digital assets held on exchanges is currently $38 billion. This figure is 12% lower than the peak of $43 billion on February 21.

On the other hand, the USDC balance on exchanges has reached $6.5 billion, the best level since March 2023. The stablecoin reserves on exchanges are crucial as they can be quickly used for trading and investing, helping to support the price action of digital assets.