As Bitcoin and Solana frequently set new records, have you noticed that stablecoins are also quietly rising? Now, according to DefiLlama, the total market capitalization of all issued stablecoins has reached an astonishing $190 billion, setting a new historical high! Are you curious about who the driving forces behind this are?
As Bitcoin continues to break new highs, stablecoins are also ushering in their own spring. Although Tether accounts for more than 70% of the market share, the market capitalization of top stablecoin products like Circle and Ethena has also increased by over 10% in the past month. Varun Paul, Senior Director of Market Infrastructure and CBDC at Fireblocks, revealed to DL News: 'The trading volume of stablecoins on our platform has surged, now accounting for more than half of the platform's trading volume.'
So, what has driven the rapid growth of stablecoins?
Imagine if you no longer needed to transfer funds from a bank to an exchange to trade those volatile cryptocurrencies, but could quickly exchange stablecoins pegged to the dollar for speculation directly on the platform, wouldn't that be much more convenient? This is a significant contribution of stablecoins to mainstream financial infrastructure. Luca Prosperi, CEO of stablecoin company M^0, told DL News: 'Digital gold remains the primary use case for cryptocurrencies, but stablecoins serve as the most direct 'Trojan horse' into the cryptocurrency realm, and their role should not be underestimated.'
Moreover, financial technology giants PayPal, Robinhood, and Stripe have also entered the stablecoin market. Among them, PayPal's stablecoin PYUSD quickly ranked among the top eight stablecoins after its launch in August 2023. Robinhood is also collaborating with cryptocurrency companies like Galaxy Digital and Kraken to launch its own stablecoin. Stripe has even invested $1.1 billion to acquire a stablecoin bridging project, which perhaps best illustrates the next steps for financial infrastructure companies.
Of course, the price surge has also been a huge boost for the growth of stablecoins. Stablecoins are one of the most popular trading pairs on major exchanges. When prices rise, trading activity also increases. Since Trump won the U.S. election and promised to loosen regulations and appoint several cryptocurrency-friendly officials, Bitcoin has risen by more than 42%. According to CoinGecko, the entire cryptocurrency market's market capitalization has grown by $1.1 trillion during the same period. Since November 6, the market capitalization of stablecoins has also increased by nearly 10%.
Looking ahead, experts are closely watching key legislation on stablecoins in the United States. Robert Leshner, CEO of Superstate and founder of Compound Finance, told DL News: 'It is still unclear who can issue stablecoins, how they operate, what behaviors are allowed, and what are not. But it is very likely that by 2025, we will see the introduction of stablecoin legislation, which will create clear expectations for stablecoin issuers, attracting more participants into the market.'
In this world of cryptocurrency filled with opportunities and challenges, the rise of stablecoins undoubtedly provides us with a new perspective and thoughts. Are you ready to embrace this new era?
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