Stablecoin Supply Expands by $5B Since U.S. Election as Investors Pile Into Crypto

As a seasoned crypto investor with a knack for spotting trends and understanding market dynamics, I can confidently say that the recent surge in the supply of Tether’s USDT and Circle’s USDC is a clear sign of growing demand for digital assets and increased liquidity within the crypto economy. The rapid expansion of these stablecoins following the U.S. election is a testament to the influx of capital into the market, which I find incredibly exciting.

Since the U.S. election, there’s been a growing influx of funds into the cryptocurrency market, evident by the rapid increase in the supply of stablecoins.

In just a week since November 5th, as per TradingView data, the combined value of the two major stablecoins, Tether’s USDT (USDT) and Circle’s USDC (USDC), has surged past $5 billion. Specifically, the number of USDT tokens in circulation has risen by a staggering $3.8 billion to reach an all-time high of $124 billion. Simultaneously, the supply of USDC has increased by $1.6 billion, bringing it close to $37 billion.

Increasing the amount of stablecoins in circulation suggests positivity for digital assets, as it points towards investments flowing into the cryptocurrency market. Stablecoins maintain their value by linking to a non-crypto asset, typically the U.S. dollar. They play an essential role in providing liquidity for trading cryptos, acting as a reserve or ‘ready cash’ that traders can use to buy assets on exchanges. Tether (USDT) is often used in offshore trading markets, while Circle’s USDC is popular on Coinbase and decentralized finance platforms.

Prior to the election, there was significant, untapped curiosity from both retail investors and institutions regarding the subject, as David Shuttleworth, a partner at Anagram, shared with CoinDesk via Telegram. Once the results were announced, liquidity and demand from the buying side started to accumulate rapidly.

One metric that underscores this behavior is the balance of Ethereum-based stablecoins on exchanges. The amount of stablecoins on exchanges declined steadily heading into the election as investors took a “wait-and-see approach”, Shuttleworth said. Then, following Nov. 5 election, stablecoin balances jumped to a yearly high of $41 billion from around $36 billion in early November, Nansen on-chain data shows, as investors deposited stablecoins pent-up demand for crypto assets

The stablecoin growth happened while activity soared across multiple corners of the digital asset economy as bitcoin (BTC) hit record highs on Donald Trump’s election victory, and anticipation of a crypto-friendly regime unleashed animal spirits.

Native USDC supply on the Solana (SOL) network grew 14% over the past week to nearly $2.9 billion, DefiLlama data shows, as Solana-based DeFi protocols saw a resurgence in transaction volumes and network revenues. Meanwhile, USDT supply on the TON (TON) blockchain to a new record of $1.1 billion, up 10% during the same period as users continued to experiment with the budding ecosystem centered around the messaging app Telegram.