The recent surge in stablecoin supply on the Ethereum network has reached an all-time high of approximately $130 billion, marking a significant trend that market participants believe could signal the start of an altcoin season. The increase is attributed to multiple blockchains, including Solana and Aptos, which have seen notable growth in their stablecoin offerings.
The U.S. Congress has recently passed two bills aimed at streamlining regulations around stablecoins, known as the GENIUS and STABLE Acts, which aim to ensure transparency and consumer protection in the industry. This regulatory clarity could provide a conducive environment for further growth.
Stablecoins volume is up 10% from last year’s M2 forecast, projected to reach $3 trillion by 2030. Notably, PayPal’s PYUSD on Ethereum and Solana, as well as USDT on TRON, have seen significant inflows in recent times. The rise in stablecoin liquidity suggests profit-taking activities or preparation for injecting liquidity into non-stable assets.
In the U.S., which aims to become a hub for crypto and AI innovation, a substantial amount of stablecoins is held, standing at $347 million as of press time. This could play a crucial role in building a crypto reserve, primarily consisting of Bitcoin and Ethereum.
The question on everyone’s mind is whether this surge in stablecoin liquidity can trigger an altcoin season. Analysts believe that a break below the neckline of the exhaustion pattern formed by stablecoin dominance could ignite such a move. The fact that altcoins are inversely correlated to paired stablecoins makes this scenario more plausible. With Bitcoin dominance dropping to 59.56%, which is a two-week decline, further decreases in BTC value could potentially lead to an increased rotation into altcoins.
While the market remains cautious, the recent developments suggest that the conditions might be ripe for an altcoin season. As regulators bring clarity and stability to the industry, the stage is set for investors to explore alternative assets with potential for growth.
Source: https://ambcrypto.com/how-130b-in-ethereum-stablecoins-could-unleash-the-next-altcoin-frenzy