Rising stablecoin supply sets the stage for the crypto market to see a strong Q3

Throughout the crypto market's consolidation phase, the total supply of circulating stablecoins has been on the rise.

There are likely two primary factors causing this rise, including global investors looking to add USD exposure to their portfolios, and so-called "Yield farmers" purchasing the stablecoins to tap into lucrative DeFi incentives.

This trend has helped drive Bitcoin's "Stablecoin Supply Ratio" to new lows, potentially being indicative of a strong base that could help the entire crypto market experienced a strong third quarter.

Crypto market lays a strong base for a Q4 uptrend as stablecoin issuance rises.

Stablecoins play an important role within the crypto ecosystem.

This trend has picked up steam throughout 2020, with the economic turbulence seen as a result of the ongoing pandemic causing Tether - the largest stablecoin by market capitalization - to see massive inflows.

The amount of stablecoins sitting on the sidelines is looked upon by many investors as a powder keg that could ultimately work to fuel a massive crypto market rally.

Data shows that there is merit to this notion, and Glassnode's SSR indicator is now signaling that recent stablecoin issuance is laying the groundwork for Bitcoin to see strong price action in the quarter ahead. "The rise in stablecoins supply has lead to new lows of the Stablecoin Supply Ratio. A low SSR indicates increased buying power for Bitcoin - a higher capacity of stablecoins to purchase BTC and thereby drive up the price."

The ongoing rise in the number of circulating stablecoins also comes as Bitcoin's volatility reels to levels not seen in over a year.

Because the large stablecoin quantity could act as dry powder to fuel an uptrend, it is a strong possibility that this imminent volatility will favor buyers.