Key points
- Stablecoin supply grew by 3% in August, reaching $162.1 billion despite a slump in the cryptocurrency market.
- Tether (USDT) leads the stablecoin market with a market cap of $119 billion, followed by USDC with $33.5 billion.
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The stablecoin supply stands at $162.1 billion following a $4.7 billion increase in August, representing 3% month-on-month growth, Artemis said. data reveals. This movement represents different trends in the market, such as institutional adoption, the search for stability and liquidity, and the growth of trust.
It is worth noting that the growth in stablecoin supply occurred in the same month that Bitcoin (BTC) fell by almost 9%, followed by the broader cryptocurrency market.
Tether USD (USDT) dominates the market, with a market cap of $119 billion. This is a significant lead over the $33.5 billion supply of USD Coin (USDC), which is the second-largest stablecoin issuer.
Sky’s DAI stablecoin ranks third, with a market share of $5.3 billion.
Chasing solid ground
Anastasija Plotnikova, CEO and co-founder of Fideum, told Crypto Briefing that this disparity reflects a change in investor behavior, who are now exchanging their holdings for a more stable and liquid alternative.
“While this trend may bolster the overall health of the cryptocurrency market by providing a safe haven for assets, it also raises critical questions about their long-term stability. The ongoing evolution of stablecoins will likely play a crucial role in shaping the future landscape of the cryptocurrency market,” he added.
Elaborating on long-term stability, Plotnikova mentions the European Union (EU) regulatory framework, the Markets in Cryptoassets Regulation (MiCA), which imposes new rules for stablecoins, adding layers of compliance and oversight.
While the results of these regulatory changes in the EU remain to be seen, Fideum’s CEO believes that stablecoins will remain essential in facilitating low-cost international transactions and driving demand and adoption in the crypto ecosystem.
Institutional adoption indicator
The rise in stablecoin supply amid falling cryptocurrency prices can also be seen as an indicator of institutional interest, according to Philipp Zentner, CEO of LI.FIHe explained that cryptocurrencies are generally entered into through stablecoins to avoid volatility risks.
This creates a flywheel where institutional adoption results in growth in stablecoin supply, which increases trust among other institutional players and signals confidence in the space.
“We can expect a significant wave of stablecoins to be launched soon. Major players such as JPMorgan, VanEck and PayPal are already developing their own stablecoins to bring their customers into the crypto ecosystem,” Zentner said.
The star application of cryptocurrencies
James Davies, COO of Crypto Valley Exchange CVEX.XYZsees stablecoins as the most successful use case in cryptocurrencies so far, boosting existing e-money platforms with trustless transfers between entities.
However, he said the stablecoin supply is still in its “very early” stage of growth, considering discussions around central bank digital currencies (CBDCs) and the potential of digital assets for transfers.
“In my view, stablecoins that effectively address capital allocation challenges will have an even greater impact in this space. We anticipate this trend will continue and their use will serve as a catalyst for further on-chain application development,” Davies concluded.
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