Stablecoins are often pegged to reserve currencies like the U.S. dollar, allowing them to function as a medium of exchange in the crypto market. A rise in stablecoin reserves can be interpreted as an increase in overall market buying power.

While Bitcoin has been trading sideways, total stablecoin reserves on exchanges🟣 saw a significant surge in August, largely driven by an increase in USDT, reaching levels last seen in Q3 2021. However, increasing stablecoin reserves does not necessarily translate into rising prices.

In fact, during the 2022 bear market, stablecoin reserves did not decrease significantly, indicating that despite having sufficient buying power, investors were hesitant to make purchases. Still, the recovery of market buying power is a constructive sign for the future.

Written by Yonsei_dent