Stablecoin Liquidity Hits Record Highs as Ripple Prepares to Enter the Market

As Ripple prepares to make an impact on the stablecoin market with its upcoming Ripple USD (RLUSD) stablecoin, market liquidity has reached record levels.

Though still in its beta testing phase, the Ripple stablecoin has taken center stage in recent times, as Ripple aims to strengthen its position in the stablecoin market, having previously penetrated the custody scene with the acquisition of Metaco. 

Ripple Gears for RLUSD Launch

A recent report from CryptoQuant suggested that Ripple could leverage RLUSD to target remittances and money transfers, noting that the project will likely take advantage of the established infrastructure of the XRP Ledger (XRPL), as well as the Ethereum network. 

Ripple announced its plans to penetrate the stablecoin market in April, noting that the market, worth $150 billion at the time, is projected to skyrocket beyond $$2.8 trillion in the next four years. 

Notably, four months after they introduced the product, Ripple launched beta testing on the Ethereum network and the XRPL in August. So far, the testing phase has minted and burned millions of the token. Ripple CEO confirmed last month that the project will launch in a matter of weeks.

Stablecoin Market Hits New Highs

Meanwhile, as Ripple prepares for the full-scale release of RLUSD, the broader stablecoin market is experiencing unprecedented growth, according to the CryptoQuant report.

As of late September 2024, stablecoin liquidity reached record highs, with the total market capitalization of major stablecoins hitting $169 billion. This marks a $40 billion, or 31%, increase year-to-date (YTD), signaling a growing demand for stablecoins.

Stablecoins, such as RLUSD, have become important for liquidity, as they provide traders with a secure way to hold and move funds between volatile digital assets and fiat currencies.

Further, stablecoin balances on centralized exchanges have also surged to record levels, particularly with USDT leading the way. USDT balances on the Ethereum network (ERC20) reached $22.7 billion in October, reflecting a 54% increase, or $8 billion, since the beginning of the year. 

Similarly, USDT balances on the TRON network have grown to $8.5 billion, all of which is held on centralized exchanges. This increase in liquidity could have a positive impact on crypto prices, as larger stablecoin reserves provide traders with more capital to execute trades efficiently.

USDT’s dominance in the stablecoin market continues to grow, currently accounting for 71% of the market. Notably, USDT boasts a market cap of nearly $120 billion, representing a 30% YTD increase. 

Meanwhile, USDC from Circle follows with a 21% market share, having reached a $36 billion market capitalization—a 44% YTD growth. The combined market cap growth of these two stablecoins has been pivotal in driving up liquidity across the crypto ecosystem.

Potential Impact on Prices 

CryptoQuant pointed out that an increase in stablecoin market capitalization is often associated with rising Bitcoin and other crypto prices. This underscores the importance of stablecoins in the broader crypto market.

Ripple’s RLUSD stablecoin could experience substantial growth once it exits the beta phase, especially given its original dual network functionality on XRPL and Ethereum. 

CryptoQuant confirmed that the XRPL decentralized exchange (DEX) has already seen a high volume of fiat currency transactions, including USD and Chinese Yuan, alongside popular stablecoins like USDT and USDC.