Stablecoin market value reaches a 14-month high

What’s new? The total market value of stablecoins has surpassed the $140 billion mark for the first time since December 2022, according to DeFiLlama. As K33 Research senior analyst Vetle Lunde notes, changes in the supply of stablecoins are an indicator of whether money is flowing into or out of the crypto ecosystem. For example, the stablecoin market is expanding this year as new money continues to flow into the crypto market, driving asset value growth.

K33 Research’s report

What else is known? The stablecoin market began expanding rapidly in early November, breaking an 18-month downtrend. Since then, capitalization is up by 12%, or $15 billion, Lunde noted, and has grown by about $10 billion since the beginning of the year.

Tether’s USDT, the market’s largest-capitalized stablecoin, added $2 billion over the past month to reach a new record of $98 billion. USDT was the biggest contributor to the sector’s growth at the end of last year, but this year’s growth is more broad-based.

For example, Circle’s USDC, the second most capitalized stablecoin, added $2,5 billion over the month, outpacing USDT’s growth over the same period and surpassing the $28,5 billion mark.

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Anagram researcher David Shuttleworth noted that the USDC supply has grown by nearly 10% over the past month and has accounted for more than half of the stablecoin sector’s overall growth. He added that more liquidity and users are entering the market and USDC is gradually taking back its share.

Source: Twitter.com

One of the reasons for USDC’s capitalization growth could be that bitcoin’s rally this year has been driven by high demand among investors in the United States, where the Circle coin is more popular. In turn, USDT dominates in Asia, Africa, and Latin America among traders on offshore exchanges such as Binance.

USDC’s rise also coincided with the re-listing of several trading pairs of the asset on Binance late last year and the launch of spot bitcoin exchange-traded funds (ETFs) in the United States. The BTC custodian for most of these funds is the Coinbase exchange, which is also Circle’s USDC issuance partner.

Coinbase in its report also says that USDC is gradually expanding its presence outside the US markets. The asset’s share of derivatives settlement and spot trading on global centralized exchanges (CEXs) is approaching 4%, while it did not reach even 1% in mid-2023.