Despite a recent crypto market drawdown, a key bull market signal has remained intact, according to new research. On-chain analytics from CryptoQuant reveal that the supply of stablecoins continues to hover around all-time highs, suggesting significant underlying liquidity in the ecosystem.

This year, the total supply of stablecoins on the Ethereum network (ERC-20) alone reached a record $185 billion and has maintained that level through November. This consistent growth is seen by some analysts as a more reliable indicator of market health than Bitcoin’s price fluctuations.

In a recent analysis, XWIN Research Japan noted that the stablecoin supply “directly reflects capital entering the crypto ecosystem.” This metric is considered crucial because it represents the primary source of liquidity for trading, Decentralized Finance (DeFi) lending, and derivatives.

A More Relevant Metric Than M2 Supply

Historically, crypto price performance has often been linked to changes in the global M2 money supply. However, as growth in that liquidity measure has cooled, it has created a more uncertain environment for risk assets. Analysts argue that stablecoin supply offers a more timely and relevant signal for the digital asset industry.

According to XWIN, stablecoin data adjusts quickly and captures investor flows faster than monthly or quarterly M2 figures. The research highlights that in both the 2021 bull market and the 2024–2025 recovery, a rising stablecoin supply clearly preceded Bitcoin’s price increases.

Binance Reserves Show Traders Are Waiting

This trend is also visible on major exchanges like Binance. Recent data shows that while the exchange’s reserves of Bitcoin and Ether are declining, its stablecoin reserves have seen significant growth. This combination suggests traders have been taking profits at price peaks and are now holding massive amounts of “dry powder” on the sidelines.

CryptoOnChain, another CryptoQuant contributor, described the situation as a phase of “armed patience.” This large volume of stablecoins parked on the exchange acts like a compressed spring. If there is a price correction or macroeconomic stabilization, this capital could provide the fuel for a new, explosive market move.