The cryptocurrency market saw a significant increase over the weekend as the total market capitalization of stablecoin, excluding algorithmic options, reached an all-time high, according to data from DеFi analytics platform DеfiLlаmа. This impressive feat marks the culmination of a period of steady development, outperforming the previous peak set in Mar 2022.
According to the most recent data, the stablecoin market cap exceeded $168.1 billion, representing a moderate yet significant 0.8% increase from the previous week. This surpasses the previous record of approximately $167 billion, set in March 2022.
It is worth mentioning that market capitalization fell significantly in October to around $122 billion. However, from the beginning of 2024, the stablecoin market has shown a consistent and impressive upward trend, culminating in this historic achievement.
Analysts are investigating the reasons for the rise in the stablecoin market cap. According to Rаchаеl Lucаs, a crypto analyst at BTCMаrkеt, this surge could indicate an increase in institutional investors’ involvement in the crypto space. Speaking with The Block, Lucаs provided two possible explanations.
Stablecoin Bridge Traditional Finance, Crypto
Moreover, investors may be looking for stability in a volatile market and adopting stablecoins as a safe haven. This is consistent with traditional financial behavior, in which investors rush to secure assets during periods of uncertainty. However, Lucаs suggests another intriguing possibility: the rise in the stablecoin market cap could reflect a broad trend of increased confidence in the crypto market, particularly among institutional investors.
Stablecoins are critical in bridging the gap between traditional finance (TrаdFi) and the cryptocurrency sector. They provide institutions with a more familiar and less volatile entry point into the cryptocurrency ecosystem. According to Lucas, this trend indicates a broad shift. Institutions are no longer just dabbling in cryptocurrency; they are actively exploring ways to incorporate stable digital assets into their trading strategies and long-term investment portfolios.
However, data from DefiLlаmа reveals Tеthеr’s USDT, the leading stablecoin, has performed outstandingly. It has ballooned by almost 28% in 2024. It began the year at $91.68 billion and has now risen to $117.84 billion. This impressive increase has solidified USDT’s dominance in the stablecoin market, accounting for around 70.17% of total market capitalization.
Circlе’s USDC, another primary stablecoin pegged to the US dollar, has also shown an upward trend in 2024. Despite some market cap fluctuations this year, USDC has managed to rise from $23.8 billion in early January to $34.4 billion, accounting for 20.44% of the stablecoin market.
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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.
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