[Analysis] Stablecoin Market Cap Rebounds by $4 Billion, but Liquidity Recovery Remains Limited

The market capitalization of stablecoins, a gauge of liquidity in the digital-asset market, has rebounded recently, but the scale of inflows remains too limited to drive Bitcoin to a new record high, according to an analysis.

CryptoQuant contributor Darkfost wrote on October 3 that stablecoin market capitalization has risen by about $4 billion since September, recovering to about $270 billion.

Still, the recent increase is modest compared with the liquidity that previously exited the market. Stablecoin market capitalization has fallen by about $14 billion from its peak in May. The increase since September amounts to about 29% of that decline.

"Stablecoin market capitalization is struggling to recover," Darkfost wrote, adding that this means liquidity flowing into the market is still not sufficient.

He added that while the recent trend shows signs of reversing, the recovery remains weak. More liquidity needs to flow into the market for Bitcoin to move to a new high.