Both the overall decentralized finance (DeFi) numbers and the total value locked on real-world assets had a 700% increase year-to-date (YTD) in 2023. This occurred concurrently with the continuation of the optimistic feeling in the market.
Following several months of severe pessimistic data, a fresh industry research by CCData reveals that the market is showing general growth. The report also indicates that institutional demand for cryptocurrency goods is increasing until the fourth quarter of 2023.
Stablecoins, which are preferred by conventional investors because to their backed reserves, had a fall in interest, despite the fact that institutional interest was observed in Bitcoin (BTC), real-world assets, Assets Under Management (AUM), and derivatives.
In spite of the fact that other assets posted minor growth, the stablecoin market experienced a precipitous decline in numbers at the beginning of the year. As a result of the rapid growth of Central Bank Digital Currencies (CBDCs) and the rising demands for more stringent controls from authorities, analysts believed that this tendency was a direct consequence of these two developments.
Stablecoin market capitalization, on the other hand, increased in October, following a string of 18 straight months of outflows. This was due to the fact that a surge in cryptocurrency funds and tokenization encouraged the creation of new capital.
The market capitalization of stablecoins is currently at $129 billion, which is thirty percent lower than its all-time high from the previous year. The value of cryptocurrencies had a precipitous decline in the previous year; however, the decline in the value of stablecoins was not as severe as the decline in the value of altcoins since investors used stablecoins as a safe haven from inflation.
Stablecoin growth is bolstered by the amount of DeFi.
In the next months, analysts at CCData anticipate that the market share will increase in line with other cryptocurrencies. This is because a new market cycle will create a new demand for the assets associated with the cryptocurrency.
During the past several months, stablecoins have seen a significant turning point, which is the spike in DeFi figures that indicates a bright prognosis for the sector. Because stablecoins were utilized as bridge assets between wallets and DeFi protocols in the majority of situations, the market cap was seeing a downward trend. This was owing to the absence of yield activities.
As the token market experiences significant growth, the value of DeFi has reached about $42 billion. Here is the latest information regarding this development.
"However, as is the case with innovative technologies, a great number of stablecoins have incorporated treasury bonds as collateral, diversifying away from solely using cash and cash equivalents or other crypto assets as collateral."
Institutional attitude was significantly influenced in the first and second quarters of 2023 by the growing number of CBDC pilots as well as the regulatory pressure that was present in the industry.
At the present time, one hundred thirty nations are investigating CBDCs in order to broaden the range of payment choices and develop the ideal model for the settlement of international transactions. The investigation of stablecoins by central banks is, according to the majority of analysts, a step that is intended to restrict the expansion and usage of private cryptocurrencies.
In 2024, there is optimism across the market.
With an eye toward the future, there will be an increase in the number of CBDCs that are formally launched, and the assets under management will also see growth as a result of the entry of additional institutional investors into the market.
At the same time as institutions are innovating around the sector and developing associated goods, it is anticipated that the 700% increase in tokenized assets will be a lift approaching the year 2024.
