Crypto liquidity rises as Ripple gears up to enter the stablecoin market

As Ripple tests the waters with its new stablecoin project, the broader crypto market is currently experiencing a sharp rise in liquidity, particularly driven by stablecoins.

Notably, Ripple is on the verge of penetrating the stablecoin space with the introduction of Ripple USD (RLUSD) in the coming weeks. Ripple president Monica Long confirmed the project will launch this year.

Currently in beta testing, millions of RLUSD tokens have been minted and burned across the XRP Ledger and Ethereum blockchain networks. 

Ripple’s stablecoin looks to target the growing demand in the stablecoin market, seeking to offer greater liquidity and efficiency. This expanding demand for stablecoins is evident in the surge in liquidity within the market.

According to CryptoQuant’s latest weekly report, in late September 2024, the total market capitalization of major USD-backed stablecoins reached $169 billion. This represents a 31% year-to-date increase, adding $40 billion in liquidity to the market. 

Stablecoins like Tether (USDT) and USD Coin (USDC) continue to lead the charge, playing an important role in bolstering the overall crypto liquidity.

Tether’s USDT, the largest stablecoin by market cap, has grown by $28 billion since the start of the year, reaching $120 billion. The growth comes despite regulatory challenges with MiCA, as Coinbase plans to delist the asset in the EU.

USDT’s $120 billion valuation gives it a commanding 71% share of the stablecoin market. Meanwhile, Circle’s USDC, which is fully MiCA-compliant, follows with a market cap of $36 billion, representing a 44% increase in 2024. Ripple previously confirmed its upcoming RLUSD would be regulatory compliant.

This rise in stablecoin liquidity is having a notable impact on centralized exchanges. USDT balances on these platforms are at an all-time high, with $22.7 billion held on the Ethereum network, marking a 54% year-to-date growth. 

Additionally, $8.5 billion worth of USDT exists on centralized exchanges via the TRON network. Larger stablecoin reserves on exchanges often correlate with higher prices for Bitcoin (BTC) and other cryptocurrencies.

However, despite this influx of liquidity, Bitcoin’s price has remained relatively flat, even as USDT balances on exchanges have increased by 20% since August 2024.