“The stalling of stablecoin supply raises doubts about Bitcoin’s chances of recovery as the U.S. inflation report approaches.”

Bitcoin (BTC) has managed to climb back above the $90,000 mark, but a key metric is casting doubt on the stability of the recent gains. The supply of major stablecoins has stalled, signaling a potential lack of new liquidity entering the market, which could hinder Bitcoin’s ability to sustain its upward momentum in the near term.

Glassnode data shows that the combined supply of the top four stablecoins—USDT, USDC, BUSD, and DAI—has remained largely unchanged, hovering around $189 billion, with just a slight 0.37% increase over the past month. Stablecoins have historically been a major source of liquidity for the crypto market, facilitating large-scale transactions and helping to stabilize prices during periods of volatility. However, the lack of significant growth in their supply suggests that demand may be slowing down, particularly ahead of the upcoming U.S. inflation data release.

The slowdown in stablecoin liquidity contrasts with the capital inflows seen during the late 2024 rally, which helped propel Bitcoin to new highs. With only $14.68 billion in stablecoin inflows recorded in the first quarter of 2024, significantly lower than the $27.3 billion seen during the late-2024 rally, the market is showing signs of a more cautious investor environment.

Wednesday’s U.S. Consumer Price Index (CPI) report will be a key catalyst for market sentiment, with expectations for a 0.3% month-on-month increase in December and a year-on-year inflation rate of 2.9%. A higher-than-expected CPI figure could lead to fears that the Federal Reserve will be less aggressive in cutting interest rates, which could dampen market optimism and cause further volatility in risk assets like Bitcoin.

While Bitcoin has recently recovered from its brief dip below $90,000, the overall stagnation in stablecoin liquidity and the uncertainty surrounding inflation data suggest that the market may be entering a phase of consolidation, potentially limiting further gains in the short term.