According to CoinDesk, a report by alternative asset manager Brevan Howard Digital predicts that the stablecoin market, including tether (USDT) and USD Coin (USDC), will grow to trillions of dollars in supply and hundreds of trillions in transaction value in the coming years. This growth is expected as global audiences increasingly access the U.S. currency through cryptocurrencies. The report suggests that stablecoins will provide financial services to the unbanked and underbanked, offer an escape from high-inflation currencies, and drive innovation built upon global open-network money movement rails.
The report highlights the recent launch of PayPal's own stablecoin, PayPal USD (PYUSD), as an example of the opportunity in stablecoins and its potential to disrupt global financial services. In 2022, stablecoins settled over $11 trillion on-chain, dwarfing the volumes processed by PayPal ($1.4 trillion) and almost surpassing the payment volume of Visa ($11.6 trillion). The authors also note that stablecoins have reached 14% of the volume settled by ACH and over 1% of the volume settled by Fedwire.
Brevan Howard Digital states that over 25 million blockchain addresses hold more than $1 in stablecoins. In comparison to traditional finance, a U.S. bank with 25 million accounts would rank as the fifth largest by number of accounts. The large number of small-dollar stablecoin holdings demonstrates the potential for stablecoins to provide global financial services to customers underserved by traditional financial institutions.
The report also notes that stablecoin usage has shown a low correlation with crypto exchange volumes, suggesting that significant stablecoin transaction volumes are likely being used for non-speculative purposes. Additionally, stablecoins have demonstrated resilience in the recent crypto market downturn, with the total market cap only dropping about 24% from its peak, compared to a 57% decline for the total crypto market cap.
