Glassnode data recorded a monthly increase of $4.1 billion in total stablecoin supply, a 21-month high for the fiat-pegged cryptocurrency following bullish momentum.
Since October of last year, the supply of stablecoins has steadily increased along with the rise in Bitcoin prices. This rise has impacted the overall stablecoin market capitalization, which as of January 18 was over $128 billion. This increase marks the largest inflow since March 2022.
Tether’s USDT dominated the scene with nearly 73% market share. Circle USD Coin (USDC), the second largest stablecoin on the market, followed with a 19% share.
Binance USD (BUSD), issued by Paxos, which the Securities and Exchange Commission claims is a security, ranked third. MakerDAO’s DAI and TUSD were also included in Glassnode’s report.
Collective stablecoin pools are an essential part of cryptocurrency trading through centralized venues like Coinbase and decentralized exchanges like Uniswap. Stablecoin supply and market capitalization progress are sometimes used to gauge market sentiment, with increases typically associated with a bullish market outlook.
Increase in stablecoin illegal transactions
A Chainalysis report on cryptocurrency crime trends pointed to a shift in criminal activity related to stablecoins along with increased transactions and supply.
The study found that stablecoins accounted for approximately 60% of illicit transactions over a two-year period. Chainalysis emphasized that the findings were based on initial estimates and that these trends do not apply to all criminal activity.
This does not apply to all forms of cryptocurrency-based crime. While sanctions-related volumes and fraud inflows primarily drive trends, stablecoins are rarely used in ransomware and darknet markets.
Chainalysis Cryptocurrency Crime Trend Report
Issuers like Tether could freeze accounts and work more closely with law enforcement instead of more decentralized protocols. USDT operators have disabled more than 30 addresses linked to suspicious transactions in Israel and Ukraine.
The report stated that Bitcoin (BTC)’s high liquidity has made it a preferred cryptocurrency for malicious actors, despite a 30% decline in BTC-based illicit finance since 2021.