Bitcoin is poised for continued upside as the Federal Reserve maintains a hawkish but status-quo stance, according to market pricing data. A Kalshi prediction market currently assigns a 94% probability to the Fed holding rates steady at the upcoming meeting, with the Federal Reserve Economic Data (FRED) indicating a target range of 3.75-4% and an effective federal funds rate of 3.88%. This lack of a tightening impulse is critical for the crypto market, as it preserves the marginal cost of leverage for carry trades and prevents increased funding pressure on stablecoin issuers.
This policy backdrop is fueling a specific rotation within the stablecoin sector, which is directly injecting liquidity into Bitcoin. Ethereum-based USDC saw a net issuance of +151.3 million, driven by 659 million mints versus 341 million burns, alongside a $241.2 million increase in market capitalization over the last 24 hours. This fresh dollar liquidity is being deployed into decentralized finance (DeFi) protocols and spot venues, a trend corroborated by a 48.51% surge in Bitcoin-chain Total Value Locked (TVL) to $6.36 billion in the same period. This capital inflow is bolstering price support for Bitcoin through both spot buying pressure and the growth of TVL on native protocols.
Simultaneously, a contraction in the Tether (USDT) market cap by -$667.5 million suggests a broader rotation of capital out of Tether and into USDC and risk assets. While the net stablecoin market grew, the divergence highlights active repositioning rather than broad crypto deleveraging, with USDC issuance serving as the marginal new bid for Bitcoin.
Source: Ethereum USDC token transfer activity pool
What would change this read
If the next 24 hours see USDC net issuance turn negative—meaning burns exceed mints—while Tether also continues to contract, the narrative of constructive rotation would collapse. Such a scenario would signal that capital is fleeing the entire stablecoin ecosystem, indicating broad deleveraging rather than a simple shift between issuers.
