stablecoin-flow

# Stablecoin Flow Analysis

## Overview

Track stablecoin supply changes, exchange reserve movements, and on-chain velocity to gauge crypto market capital flows. Stablecoins (USDT, USDC, DAI, etc.) are the "dry powder" of crypto — minting signals new capital entering, burning signals capital leaving, and exchange reserve changes reveal buying/selling intent.

## Core Concepts

### 1. Stablecoin Supply as Market Indicator

**Total stablecoin market cap is the single best proxy for crypto market liquidity.**

```python
# Stablecoin supply growth → crypto market liquidity expansion
# Historical correlation: BTC price and total stablecoin supply r > 0.85

stablecoin_supply = {
    "USDT": 140_000_000_000,    # ~$140B (dominant, ~65% share)
    "USDC": 45_000_000_000,     # ~$45B (~20% share)
    "DAI": 5_000_000_000,       # ~$5B (decentralized)
    "FDUSD": 3_000_000_000,     # ~$3B (Binance ecosystem)
    "USDS": 2_000_000_000,      # ~$2B (Sky/MakerDAO)
}
total = sum(stablecoin_supply.values())
```

**Supply change signals:**

| Supply Change (30d) | Interpretation | Signal |
|--------------------|----------------|--------|
| > +5% | Rapid minting, new capital rushing in | Strong bullish |
| +2% to +5% | Steady capital inflow | Bullish |
| 0% to +2% | Stable, no significant new capital | Neutral |
| -2% to 0% | Mild redemptions | Cautious |
| < -2% | Capital exiting crypto ecosystem | Bearish |

### 2. Mint/Burn Event Analysis

**USDT (Tether) minting signals:**
- Tether mints new USDT → deposits to exchanges → precedes buying activity
- Large mints ($500M+) historically precede BTC rallies by 1-7 days
- Minting often happens in batches: "pre-mint to Tether treasury" → later distributed to exchanges

**USDC (Circle) signals:**
- USDC is more regulated and institutional-oriented
- USDC net minting = institutional/TradFi capital entering
- USDC net burning = institutional capital exiting (redeeming for USD)
- USDC/USDT ratio rising = more institutional participation (bullish for market maturity)

```python
def mint_burn_signal(mint_events, burn_events, lookback_days=7):
    """Analyze recent stablecoin mint/burn events."""
    net_mint = sum(e.amount for e in mint_events if e.days_ago <= lookback_days)
    net_burn = sum(e.amount for e in burn_events if e.days_ago <= lookback_days)
    net_flow = net_mint - net_burn

    if net_flow > 1_000_000_000:    # >$1B net mint in 7 days
        return "large_capital_inflow"
    elif net_flow > 500_000_000:
        return "moderate_inflow"
    elif net_flow > 0:
        return "mild_inflow"
    elif net_flow > -500_000_000:
        return "mild_outflow"
    else:
        return "large_capital_outflow"
```

### 3. Exchange Stablecoin Reserves

**Stablecoins on exchanges = "buy power sitting on the sidelines"**

```python
# Exchange stablecoin reserve interpretation
def exchange_reserve_signal(reserve_change_7d_pct, total_reserve_usd):
    """
    Rising exchange stablecoin reserves = buying power accumulating
    Falling exchange stablecoin reserves = capital deployed or withdrawn
    """
    if reserve_change_7d_pct > 5:
        return "buy_power_accumulating"     # Dry powder building up
    elif reserve_change_7d_pct > 2:
        return "mild_accumulation"
    elif reserve_change_7d_pct < -5:
        return "deployed_or_withdrawn"       # Either bought crypto or left exchange
    elif reserve_change_7d_pct < -2:
        return "mild_deployment"
    else:
        return "stable"
```

**Combined with BTC price action:**

| Exchange Stable Reserves | BTC Price Action | Interpretation |
|-------------------------|-----------------|----------------|
| Rising | Rising | Capital inflow + active buying = strong bull |
| Rising | Falling | Capital parking, waiting for bottom = accumulation |
| Falling | Rising | Capital being deployed into BTC = buying pressure |
| Falling | Falling | Capital leaving exchanges entirely = risk-off |

### 4. Stablecoin Dominance

**Stablecoin dominance = total stablecoin market cap / total crypto market cap**

```python
# Stablecoin dominance as a contrarian indicator
stablecoin_dominance = total_stablecoin_mcap / total_crypto_mcap * 100

if stablecoin_dominance > 12:
    signal = "high_cash_allocation"      # Market fearful, lots of cash on sidelines
    contrarian = "bullish"               # Cash will eventually re-enter
elif stablecoin_dominance > 8:
    signal = "moderate_cash"
    contrarian = "neutral"
elif stablecoin_dominance < 5:
    signal = "low_cash_allocation"       # Market fully invested, little dry powder
    contrarian = "bearish"               # No marginal buyers left
```

### 5. On-Chain Stablecoin Velocity

**Velocity = on-chain transfer volume / supply**

High velocity = stablecoins are being actively used (trading, DeFi, payments)
Low velocity = stablecoins are sitting idle (holding, waiting)

```python
def velocity_signal(transfer_volume_7d, supply):
    velocity = transfer_volume_7d / supply
    velocity_annualized = velocity * 52  # Weekly to annual

    if velocity_annualized > 50:
        return "high_activity"     # Very active usage, likely bull market
    elif velocity_annualized > 20:
        return "moderate_activity"
    elif velocity_annualized < 10:
        return "low_activity"      # Stablecoins idle, bear market / accumulation
```

### 6. Chain-Level Stablecoin Distribution

Track where stablecoins are flowing across different blockchains:

| Chain | Primary Stablecoins | What Inflows Signal |
|-------|-------------------|---------------------|
| Ethereum | USDT, USDC, DAI | DeFi activity, institutional usage |
| Tron | USDT (dominant) | OTC trading, emerging market transfers |
| Solana | USDC | High-frequency DeFi, memecoin activity |
| Arbitrum | USDC, USDT | L2 DeFi growth |
| Base | USDC | Coinbase ecosystem growth |
| BSC | USDT, FDUSD | Binance ecosystem, retail trading |

**Cross-chain flow signals:**
- USDT migrating from Tron → Ethereum: capital moving from OTC/P2P to DeFi (more