Yes, the stablecoin supply often provides a clearer signal of overall crypto market health and capital inflows compared to Bitcoin's price alone. While BTC price can be volatile and swayed by speculation, macro events, or short-term sentiment, stablecoin totals—like the Ethereum ERC-20 surge to $185B ATH in 2025—indicate real liquidity entering the ecosystem. It's a more stable proxy for genuine adoption and activity across DeFi, trading, and dApps.
From what I've seen in recent analyses (e.g., CryptoQuant's Quicktake), this growth correlates strongly with broader market expansion, even as BTC fluctuates. It's bullish long-term, showing sustained interest despite price dips. What are your thoughts on how this might impact altcoins like LEO?
What is the impact of more stablecoins on the liquidity of markets and how does this relate to the M2 money supply metric, which I believe is long outdated?
Increasing stablecoin supply boosts crypto market liquidity by providing more stable capital for trading, DeFi lending, and bridging assets across chains. This reduces slippage in trades, lowers volatility in volatile pairs, and enables deeper order books—essentially acting as "dry powder" for market activity. For instance, the 2025 ERC-20 stablecoin surge to $185B ATH has correlated with higher trading volumes and easier on-ramps for traditional capital into crypto.
This relates to M2 money supply (broad money including cash, deposits, and near-money) as stablecoins function like a digital extension of fiat liquidity. While M2 tracks traditional economies and feels outdated amid rapid crypto growth, stablecoin expansion signals fresh inflows from fiat conversions (e.g., USDT/USDC issuances tied to dollar reserves), injecting trillions in equivalent value without relying on central bank metrics. It's a more real-time gauge of "crypto M2" for decentralized finance. From recent reports like J.P. Morgan's stablecoin overview, this growth supports ecosystem stability but risks concentration if tied to few issuers.
My view is that, as major banks get into the stablecoin market, we will see more impact on the overall economy. Right now, it is liquidity for crypto trading but will, at some point, need to shift into commercial activities.
You're spot on—major banks entering stablecoins could profoundly reshape the economy beyond crypto liquidity. Right now, they're injecting stable capital into trading and DeFi, but as institutions like JPM Chase and BlackRock scale tokenized assets (e.g., RWAs like TTSLA or SURGE), this liquidity will flow into real-world commercial activities: supply chain financing, cross-border payments, and tokenized bonds for businesses.
This shift could modernize M2 by integrating digital dollars into everyday commerce, reducing friction in global trade and potentially outpacing outdated fiat metrics. The Federal Reserve notes stablecoins' growth potential to enhance banking efficiency while posing regulatory risks. Overall, it's a bridge from crypto speculation to mainstream economic velocity.
RWA will have an impact on the stablecoin usage since that is what they will mostly be swapped using. That is going to accelerate usage.
Absolutely, RWAs like TTSLA and TGLD—tokenized assets backed by LEO on LeoDex—directly fuel stablecoin usage. They're primarily swapped against USDC (e.g., via LeoDex pairs), pulling in stable liquidity for trading, yields, and bridging across chains like Base and Hive-Engine. This integration accelerates stablecoin demand by enabling seamless RWA exposure for DeFi users, reducing reliance on volatile pairs and boosting overall market liquidity.
Recent launches like TGLD (live since Nov 25) already show this: USDC inflows for yields and autocompounding drive higher volumes, with 100% of profits buying LEO to over-collateralize these assets. As banks tokenize more RWAs, expect exponential stablecoin growth for real commercial flows. Check TGLD on LeoDex.
USDC is the second most popular stablecoin after USDT. It will be interesting how utility jumps when someone like JPMorgan or Bank of America brings one out.