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After weeks of sideways trading and sharp corrections across Bitcoin and the altcoin market, a notable trend is quietly unfolding beneath the surface of the crypto market. Price action has shown capital exiting major tokens, but the reassuring takeaway from flow trends is that much of this capital hasn’t fully left the ecosystem. Instead, it’s being parked in stablecoins, which is a development that may be more bullish than it seems on the surface.

Stablecoin Market Cap Growing, Surpasses $220 Billion

Crypto traders are obviously adopting a very cautious stance towards investing in cryptocurrencies due to the current uncertainty in the market. This cautious stance, although it has led to a slowdown in buying pressure, flow trends highlight a shift in strategy, not a total loss of bullish sentiment.

The lingering bullish sentiment is noted in the stablecoin market cap, which has continued growing higher despite the downturn. According to data from IntoTheBlock, the total stablecoin market recently crossed a milestone of $220 billion and is showing no signs of stopping. As noted by the on-chain analytics platform, this growing pool of liquidity could soon become the fuel for the next phase of upside movement if and when confidence returns.

Image From X: IntoTheBlock

One beneficiary of the growing stablecoin niche is Ripple’s recently launched stablecoin, RLUSD. This new stablecoin has been growing with pace since its launch in December 2024. Its connection with the payments technology company adds a new player to the stablecoin race, joining heavyweights like USDT and USDC in attracting inflows.

At the time of writing, RLUSD has a circulating supply of $160 million and a growing number of Ethereum mainnet addresses holding it.

Image From X: IntoTheBlock

Stablecoin Market Cap Expansion: What It Means For Crypto’s Next Move

The significance of the growing stablecoin market cap trend extends far beyond risk-averse behavior from crypto traders. As noted by IntoTheBlock on social media platform X, “While these tokens are widely used to sidestep volatility, it’s hard to ignore how all that liquidity could become the spark for the next market upswing once sentiment flips bullish.” 

In many ways, this expansion is a buildup of liquidity that can be quickly deployed into cryptocurrencies. It means that investors are not abandoning crypto altogether. They are simply watching and waiting. Stablecoins are frequently used as an entry point back into risk-on assets, which means this capital is in a prime position to re-enter the market at a moment’s notice. 

All investors need right now is a bullish event, and these funds can be easily converted to Bitcoin and other cryptocurrencies on crypto exchanges. On the other hand, a demerit of the stablecoin market’s growth is that it will continue to delay inflows into Bitcoin and other cryptocurrencies.

Interestingly, data from CoinGecko puts the market cap of stablecoins currently at $236.7 billion. This figure takes into account not just fiat-backed stablecoins but also crypto-backed, commodity-backed, and algorithmic stablecoins.

Featured image from KuCoin, chart from TradingView

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The US has lifted sanctions against crypto mixer Tornado Cash but the procedure has drawn widespread criticisms. Coinbase Chief Legal Officer (CLO) Paul Grewal has taken swipes at the US Treasury for its “botched” attempt at waiving the need for a final judgment.

Coinbase CLO Pokes Holes In US Treasury’s Latest Court Filing

In a strongly worded post on X, Coinbase CLO Paul Grewal railed against the US Treasury’s handling of Tornado Cash’s delisting from the sanctions list. According to Grewal’s disclosure, the US Treasury filed a pleading to moot the need for a final judgment on the matter.

In legal terms, a party to dispute can apply to moot a final judgment, arguing that the issue at hand is no longer significant or actionable. Following Tornado Cash’s removal from the Specially Designated Nationals and Blocked Persons (SDN) list, the US Treasury’s latest filing seeks to waive a final judgment on the case. Tornado Cash users have been in court, challenging the US Treasury’s decision to place the mixer on the SDN list.

However, Grewal argues that the filing runs contrary to established legal processes in the US. He notes a proper filing follows only if the defendant can show that the “practice cannot reasonably be expected to recur.”

The Coinbase CLO cited several legal precedents involving law enforcement agencies removing sanctions and not moving a case. He argues that without a final court judgment, law enforcement can review their decision to impose fresh sanctions at a future date.

“Treasury has likewise removed the Tornado Cash entities from SDN, but has provided no assurance that it will not re-list Tornado Cash again,” said Grewal.

A Protracted Legal Battle Against Authorities

The road toward the lifting of Tornado Cash’s sanctions was long and winding. A raft of  Tornado Cash users headed to court to protest the placing of the mixer on the SDN list. US authorities say the mixer played a principal role in laundering nearly $500 million worth of stolen digital assets by North-Korean backed Lazarus Group.

After notching a series of small wins in Court, Grewal criticized the US Treasury for failing to comply with a court ruling clarifying the status of Tornado Cash’s smart contract. The court ruled that the smart contract did not form property under the IEEPA as it is non-erasable.

Tornado Cash has received support from Coinbase with the Ethereum Foundation supporting the legal defense of lead developer Alexey Pertsev.

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Aliyu Pokima

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.