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Stablecoins Hit Highest Market Cap Since 2022

Published February 27, 2024 12:34 PM
Teuta Franjkovic
Published February 27, 2024 12:34 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The total value of all stablecoins has reached its highest point since late 2022.
  • Circle’s USDC stablecoin has seen strong growth, outpacing Tether.
  • This suggests a potential market recovery and a possible shift in dominance within the stablecoin space.

This year, the stablecoin market is witnessing rapid growth. Right now, new investments are flowing into the digital asset sector and propelling cryptocurrency forward.

CoinMarketCap reports that the overall market value of stablecoins  surged beyond $140 billion in February, marking the highest point since December 2022, as per DefiLlama’s findings. 

Stablecoins: The Digital Bridge Between Fiat and Crypto Markets

Stablecoins, which are digital representations of traditional currency on the blockchain, play a crucial role in connecting fiat money with blockchain markets.

They offer liquidity essential for trading and lending activities within digital asset markets.

The increasing market capitalization of stablecoins represents a significant milestone for the cryptocurrency industry at large. This is because it highlights stablecoins’ importance in facilitating smoother transactions and enhancing market stability.

Changes in the supply of stablecoins act as an indicator of money moving into or out of the crypto ecosystem, according to Vetle Lunde, a senior analyst at K33 Research , in a market report released on Friday.

Beginning in early November, the stablecoin market saw a swift reversal from a harsh 18-month downtrend, experiencing a 12% increase in market capitalization, which equates to an expansion of roughly $15 billion, as noted by Lunde. Remarkably, about $10 billion of this growth occurred since the start of the year, indicating a significant uptick in stablecoin market activity.

USDT Hits Record $98 Bn as Market Expands Broadly

Tether’s USDT, the heavyweight of the stablecoin arena, has achieved a new milestone, reaching an all-time high market capitalization of $98 billion. This represents an addition of approximately $2 billion in just the past month, according to CoinGecko’s data . While Tether spearheaded the stablecoin market’s growth in late 2023, the 2024 expanion encompasses a wider array of cryptos.

The second-largest stablecoin, USDC, issued by Circle and with backing from crypto exchange Coinbase, has seen a significant revival. Starting the year at $24 billion, its market cap surged to over $28.5 billion, as reported  by CoinGecko. This growth of nearly $2.5 billion in the last month not only demonstrates a resurgence but also shows USDC’s growth rate surpassing that of Tether.

Anagram researcher David Shuttleworth, observed  an notable increase in USDC supply, which surged by nearly 10% over the last month. This growth accounted for over half of the overall expansion in the stablecoin market. Shuttleworth highlighted the steady influx of liquidity and users into the crypto space meant USDC regained its market share.

USDC’s Growth Fueled by Bitcoin Rally and Strategic Moves in U.S.

The recent resurgence of USDC, the second-largest stablecoin, can be attributed to a strong demand from American investors.

USDC is notably preferred by traders in the United States. On the other hand, USDT is dominant among traders in Asia, Africa, and Latin America on offshore exchanges like Binance.

This shift aligns with Binance’s decision to relist several USDC trading pairs and the introduction of bitcoin spot ETFs in the US. Moreover, many of these ETFs utilize Coinbase for Bitcoin settlements, as highlighted in a recent market report  by Coinbase.

Percentage of total volume on CEXs
Credit: Amberdata/Coinbase

USDC Expands Its Global Presence in Trading Markets

According to a recent report, USDC is carving out a more significant role in global markets.

The stablecoin has seen its market share in both derivative and spot trading settlements on worldwide centralized exchanges increase to nearly 4%, up from below 1% in mid-2023.

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