Stablecoin market hits record $169B
The value of the stablecoin sector has hit a groundbreaking figure, climbing to a market capitalization of $169.553 billion. This level is unparalleled in its history, signaling a continuous upward trend for the eleventh month in a row.
Data sourced from DefiLlama reveals that this latest high has eclipsed the former high of $167 billion recorded in March 2022, prior to a substantial decline observed in that same year.
It’s important to note that the current market cap figures do not include algorithmic stablecoins, which derive their value from algorithms instead of being backed by external assets.
Tether has significantly contributed to the stablecoin sector's growth, with its market capitalization beginning 2024 at $91.69 billion. Following steady monthly growth, USDT's market cap has surged to over $117.844 billion by August.
Circle’s USD Coin (USDC) has also seen its market cap rise, reaching upwards of $34.338 billion. Despite being the peak for USDC in 2024, this figure still falls short of its peak market cap of $55.8 billion, achieved in June 2022.
The increased issuance of stablecoins has reignited discussions on how it might influence the price of Bitcoin. The influx of liquidity from these dollar-pegged tokens is perceived as an opportunity for Bitcoin to experience a price increase.
At present, Bitcoin is trading at $63,645, experiencing a slight dip from its previous day’s high of $64,879. This added liquidity might require some time to be reflected in Bitcoin’s market performance as it accommodates the new capital from stablecoins.
Despite the expanding market cap, there has been a noticeable decrease in stablecoin trading volumes. A CCData report indicates a reduction of 8.35% bringing volumes down to $795 billion in July, a decline attributed to reduced transactions on centralized trading platforms.
This reduction in trading volume is linked to the rollout of the Markets in Crypto-Assets (MiCA) Regulation in Europe, sparking debate over the future of stablecoins such as USDT in this region.
This trend of diminished trading volumes persisted into August, with the latest estimates slightly exceeding $50 billion, as per CoinMarketCap’s reports.
As the stablecoin industry continues to expand, entities like Tether and Circle are increasingly investing in US Treasury bills as their asset of choice for backing.
These assets, celebrated for their security and liquidity, have become a foundational element in guaranteeing a 1:1 backing for stablecoins.
This development has underscored Tether and Circle’s significant status in the market, dedicating efforts to preserve the stability and trustworthiness of their offerings.
