Stablecoins hit record market cap of nearly $170 billion after year of growth

Stablecoins have hit an all-time market high of $169.57 billion after nearly a year of uninterrupted growth.

Major assets such as Tether’s USDT and Circle’s USDC have seen a significant resurgence this year, along with a newcomer.

Stablecoin market capitalization increase

Data compiled by DefiLlama revealed that this is the highest market high for the stablecoin, surpassing the previous high of $167 billion set in March 2022, which then fell to $135 billion at the end of year

Weighing in on the latest milestone, crypto analyst Patrick Scott said this new spike signals a new influx of capital into the crypto market, suggesting renewed interest and confidence in the space.

“And so, we are at a new historical high. The total market cap of stablecoins, excluding algorithmic stablecoins, is now at an all-time high, surpassing its previous high since early 2022. New money is flowing into crypto.”

The growing market capitalization of stablecoins could be a sign that institutional investors are funneling more funds into cryptocurrencies, but Scott emphasized that retail participation has held up for at least eight months.

At the top of the chart is the leading stablecoin, USDT, which has seen a roughly 28% increase in market capitalization so far this year, from around $92 billion at the start of the year to $118 billion at the time of writing. USDT now represents about 70% of the entire stablecoin market cap.

Meanwhile, Circle’s USDC has also shown growth in 2024, despite some fluctuations, rising from nearly $24 billion in early January to $34.67 billion on August 26.

Moreover, the PayPal-backed stablecoin PYUSD has also witnessed an impressive rise. It has overtaken the USDD to become the fifth largest stablecoin, with a market capitalization exceeding $1 billion over the weekend.

The increase in market capitalization has not stopped the decline in trading volumes of stablecoins. CCData reported an 8.35% reduction in July trading volumes to $795 billion, driven by lower activity on centralized exchanges and regulatory issues in Europe due to the regulation of markets in cryptoassets ( MiCA). This downward trend continued in August, with current volumes around $52 billion.

Stablecoin Minting Powers Bitcoin

According to Matrixport’s latest findings, Bitcoin’s recent rise to $65,000 has been significantly influenced by the minting of stablecoins. Despite sporadic Bitcoin ETF inflows, the steady coinage of stablecoins has emerged as the main driver of this bullish momentum over the past two weeks.

Activity in stablecoins, which serve as a crucial on-ramp to the crypto market, appears to be the key factor supporting BTC’s rise.

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