Stablecoin supply is the crypto market's money supply

Stablecoins are the dollars of the crypto economy: the cash traders hold between positions and the settlement asset for most activity. When their total supply grows, there is more money in the system waiting to be deployed. When it shrinks, liquidity is leaving.

A liquidity gauge

New stablecoins are issued when dollars come in and redeemed when they leave. That makes aggregate supply one of the cleanest measures of whether money is entering or exiting the market, much cleaner than prices, which move on sentiment and leverage.

The platforms that hold and distribute stablecoins earn income on the reserves behind them, so growth in supply feeds them directly.

What I'm watching

• Aggregate stablecoin supply and its rate of growth
• Stablecoin balances on exchanges, which show money ready to trade
• Income from reserves at the platforms that distribute them

Where I stand

Flat. Supply is growing steadily rather than surging, which supports activity without signalling a new wave.

What would change my mind

A sharp acceleration in supply growth. That has tended to come before periods of heavier activity, and it would change the picture for the exchanges quickly.