The stablecoin market has seen its total market capitalization reach a record 168 billion USD after 11 months of consistent growth. In fact, according to data from DeFiLlama, the market cap of 168 billion USD marks a new all-time high. This figure surpasses the previous peak recorded in March 2022.
However, the figures exclude algorithmic stablecoins, which are those that maintain their value through algorithmic mechanisms rather than being backed by external assets such as fiat currency or gold.
The market had already peaked at 167 billion USD in March 2022. However, it suffered a sharp decline, falling to 135 billion USD by the end of the year.
New money is entering the crypto market
Cryptocurrency analyst Patrick Scott, known in the industry as “Dynamo DeFi,” noted that the rising market capitalization of stablecoins has positive impacts on the cryptocurrency market.
“New money is coming into crypto,” he wrote on X in response to the market cap milestone.
“And so, we are at a new all-time high. The total market cap of stablecoins, excluding algorithmic stablecoins, is now at an all-time high, surpassing its previous high from early 2022.”
While Scott did not provide specific reasons for the market’s resurgence, he noted that retail participation has been present for at least eight months.
And just like that, we're at a new all-time high.
Total stablecoin market cap, excluding algorithmic stables, is now at the highest point ever, surpassing its previous high from early 2022.
New money is entering crypto. pic.twitter.com/xi25HLWlPr
— Patrick Scott | Dynamo DeFi (@Dynamo_Patrick) August 25, 2024
In fact, Tether (USDT), the leading stablecoin, has played a key role in this growth. At the start of 2024, USDT had a market cap of 91.69 billion USD. Since then, the company has been posting steady monthly gains, reaching over 117 billion USD in market cap in August.
Circle’s USD Coin (USDC) also saw gains over the year, reaching a market cap of over 34 billion USD, its highest point in 2024. However, this figure remains significantly below the record high of 55.8 billion USD in June 2022.
Despite the growth in market capitalization, stablecoin trading volumes have declined. For example, a report by CCData revealed an 8.35% drop in trading volumes to 795 billion USD in July, attributed to reduced activity on centralized exchanges and regulatory concerns in Europe.
The downward trend has persisted into August, with trading volumes currently just above 46 billion USD, according to CoinMarketCap.
Stablecoin Minting Pushes BTC to 65K USD: Matrixport
Stablecoin minting was a key factor in driving Bitcoin’s recent surge to 65,000 USD, according to data from Matrixport. Over the past 2-3 weeks, the consistent creation of stablecoins has given Bitcoin a significant boost, acting as a vital fiat on-ramp into the crypto market.
#MatrixportTechnologies Daily 📊 – 8/26
Stablecoin Minting Drives BTC to $65K 🚀
Robust #stablecoin minting is the main force behind #Bitcoin rise, suggesting institutional influence surpasses macroeconomic factors.#Matrixport #CryptoMarket #MarketTrends #Cryptocurrency pic.twitter.com/SI594sx5x4— Matrixport Official English (the only official X) (@Matrixport_EN) August 26, 2024
While Bitcoin Spot ETFs have also seen increased inflows, Matrixport’s analysis suggests that the main driver behind Bitcoin’s price surge is the steady inflow of stablecoins.
This trend suggests that institutional investors may be behind the current surge, using stablecoins as a mechanism to enter the cryptocurrency market. Notably, the stablecoin market, currently valued at over $140 billion, remains unregulated.
Last month, Senators Cynthia Lummis and Kirsten Gillibrand joined forces to propose a new bill that aims to regulate stablecoins.
Under the proposed legislation, issuers of payment stablecoins would be subject to operational and reserve requirements, including the creation of subsidiaries dedicated to issuing stablecoins.
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