With the increase in demand and adoption of stablecoins, the total market capitalization of stablecoins surpassed $200 billion for the first time on Wednesday. According to data from CCData and DefiLlama, stablecoins have grown by another $10 billion in market capitalization in just two weeks since surpassing the $190 billion record set during the 2022 bull market last month.
Source: CCData
As the cryptocurrency market emerges from a bear market, the demand for stablecoins has steadily grown over the past year. Following Donald Trump's victory in last month's election, which supports cryptocurrencies, the growth rate of stablecoins has significantly accelerated, with their supply increasing by nearly $30 billion since November 6.
Data from DefiLlama shows that the largest stablecoin by market capitalization is Tether's USDT, which has increased its supply to a record of around $140 billion, growing about 12% in a month. On December 10, Tether announced that the Financial Services Regulatory Authority (FSRA) of Abu Dhabi had accepted USDT as a 'recognized virtual asset' (AVA) in the Abu Dhabi Global Market (ADGM).
The second largest stablecoin by market capitalization is USDC issued by Circle, which has also grown by about 12% in the last month, reaching approximately $41.6 billion. Circle recently established a new strategic partnership with cryptocurrency exchange Binance to promote the global adoption of USDC.
The actual use of payment, savings, and other services has also helped drive the growth of stablecoins.
In addition to the growth of the cryptocurrency market, the actual applications of stablecoins have also helped expand the scale of this asset class. A report published in September of this year showed that the use of stablecoins for payments, remittances, and savings is increasing, especially in developing countries where local currencies are rapidly depreciating and financial systems are fragile.
Nik Milanovic, a partner at venture capital firm Fintech Fund, pointed out that a sign of stablecoins being adopted in non-crypto applications is the rapid growth in the number of stablecoin transactions on transfer applications, including peer-to-peer payment platforms.
Source: Nik Milanovic
Tokenized products that provide price stability and returns to investors are also very popular. According to data from DefiLlama, the USDe issued by the stablecoin protocol Ethena has grown nearly 88% in a month to reach $5.6 billion, becoming the third largest stablecoin by generating returns through shorting Bitcoin (BTC) and Ethereum (ETH) perpetual contracts. The stablecoin USD0 from the emerging decentralized finance (DeFi) protocol Usual has risen to $790 million, doubling in size during the same period.
Bitwise predicts that the market value of stablecoins will double next year.
Digital asset management company Bitwise predicted in a report released on Tuesday that the market size of stablecoins will reach $400 billion by 2025, with one key catalyst possibly being the long-awaited stablecoin legislation passed by the US Congress, defining rules for companies and institutions to issue stablecoins and interact with them.
The report adds that other growth catalysts include popular fintech applications integrating stablecoins into their services, following the example of PayPal's PYUSD stablecoin, as well as the increasingly important role of stablecoins in global payments and remittances.
Not only does Bitwise express optimism for stablecoins, but Standard Chartered and its digital asset brokerage Zodia Markets predicted last month that the adoption rate of stablecoins will grow significantly, potentially accounting for 10% of US M2 transactions in the future.
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