Key Takeaways

What does the recent stablecoin surge indicate?

It signals strategic capital rotation, with investors moving into stablecoins as safe havens while risk assets retraced.

Is the market showing signs of a bottom?

Capital is flowing back on-chain, suggesting the recent flush shook out weak hands while stronger hands remain, setting up a stronger rebound.

Typically, a negative correlation between liquidity flowing into stablecoins and draining from the rest of the market is a bullish signal. It suggests that capital isn’t leaving the market. Instead, it is simply repositioning.

Right now, we’re seeing a similar setup.

It’s been exactly 10 days since the flash crash that wiped out liquidity across the board. However, looking at the flows over this period, it looks like capital was sitting on the sidelines, waiting for a clear entry point. 

Given this context, the total crypto market cap has jumped roughly $150 billion to $3.71 trillion in less than 72 hours. Could this be an early sign that the market has found a near-term bottom?

USDT & USDC minting reflect strategic capital moves

The post-crash liquidity flows are pretty clear from the data.

First, TOTALES (market cap ex-stablecoins) dropped roughly $630 billion. Meanwhile, stablecoin market cap jumped to a record $318 billion, showing that capital rotated into stablecoins while risk assets were retracing.

On top of that, the top two stablecoin issuers were quick to react. Since the crash, about $6 billion in Tether [USDT] and Circle [USDC] has been minted, signaling a move that looks strategically timed.