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Citi Wealth stated in its latest report that the adoption and growth of stablecoins could 'solidify the long-term global dominance of the dollar,' which also challenges the notion that Bitcoin will end the dominance of fiat currencies.
Stablecoin trading volume accounts for over 80% of cryptocurrency, and clear regulations will definitely increase its attractiveness.
According to a report from The Block, Citi Wealth strategists believe that stablecoins not only have the potential to strengthen the dollar's dominance but also challenge the notion that Bitcoin will one day end the dollar's supremacy.
Initially, cryptocurrencies like Bitcoin were seen as competitors to central bank-issued currencies. In fact, some believe Bitcoin could end the dollar's hegemony. However, Citi wrote in a new report that stablecoins, which account for more than four-fifths of cryptocurrency trading volume, are challenging this notion.
Because the vast majority of stablecoins are pegged to the dollar, and issuers retain dollars and U.S. Treasury bonds as reserves. If the U.S. government takes further steps to legitimize stablecoins, it could solidify the dollar's dominance.
Clearer regulations may further enhance the attractiveness of stablecoins. The demand from stablecoin issuers for U.S. Treasury bonds may increase from the current purchase amount of about 1%. Therefore, this cryptocurrency will not usurp the dollar's position but can make it easier for the world to access dollars and solidify the dollar's long-standing global dominance.
Stablecoin trading volume surpasses Visa.
Stablecoin trading volume has also reached a historic high, with transactions in the first quarter of 2024 reaching $5.5 trillion. In comparison, Visa's transaction volume is about $3.9 trillion.
In response to this challenge, Visa, PayPal, and other traditional players are also adjusting by offering their own stablecoins or settling transactions using currencies from other companies.
According to data from CoinGecko, the total market value of stablecoins has reached a historic high of over $200 billion, growing by 13% in the past month. Among them, USDT remains the leader with a market value of $138.6 billion, USDC has a market value of $41.5 billion, and the third place is the rapidly rising USDe, which doubled from $2.5 billion at the beginning of October to $5.6 billion.
[Disclaimer] The market is risky, and investments should be made with caution. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at your own risk.
This article is authorized for reprint from: (Chain News)
'Don't think too optimistically! Citi: Bitcoin cannot defeat the dollar, stablecoins are more favorable for the dollar' was first published in 'Crypto City.'
