Beyond the Fed drama, something else has been brewing beneath the surface—stablecoin supply has been surging since November 2024.

Normally, that would signal more liquidity for the market (aka more fuel for prices to rise), but here’s the catch: it’s not benefiting investors as expected.

Why? While the total supply has increased, stablecoin reserves on spot exchanges have declined, whereas reserves on derivatives exchanges are on the rise.

This suggests that current price movements are being driven more by derivatives trading than actual spot buying.

In other words, the issue isn’t a lack of liquidity—it’s a lack of genuine buying demand.

If that doesn’t change, brace for more volatility in the near term.