Stablecoin market capitalization and trading volume decrease while Tether wins market shares

Stablecoin market capitalization and trading volume decrease while Tether wins market shares

Title: Stable coins on the withdrawal: Fitch report shows that the overall offer drops

Is the age of the stable coins already over? A current report by Fitch suggests that the volume of the stable coins decreases and the overall market capitalization of the sector has also decreased significantly. According to data from the Dashboard of The Block Crypto Data, the total range of stable coins from $ 138 billion fell to $ 124 billion on July 3 at the beginning of the year.

The numbers speak for themselves: The average daily trade volume of the top 10 stable coins fell from $ 53 billion to $ 28 billion in May in March. This decline could indicate that investors are increasingly turning off the stable coins. But Fitch indicates that stable coins still offer better liquidity support than other cryptocurrencies.

It is important to note that stable coins are usually linked to Fiat currencies, especially the US dollar. However, they are not exclusively covered by an asset. The underlying reserves can consist of different types of assets, including cryptocurrencies, gold, oil or algorithmic stable coins.

Despite this trend, Tether’s Usdt recently took off market shares from his competing stable coins. In particular, after the incident with USDC in March, reporting on Tether has expanded. It is interesting that the composition of Tether reserves has changed. The proportion of commercial papers and repos rose to 65 % or 10 % of the reserves by the end of the first quarter of 2023.

Another interesting aspect of FITCH report refers to Binance and StableCoin Busd. Binance increases the liquidity for Busd by securing back securities with long -term, flexible bonds in its portfolio. These bonds can be canceled daily and thus contribute to the improved liquidity of the stable coin.

Overall, Fitch's report shows that the volume of the stable coins and the overall market capitalization of the sector are declining. It remains to be seen whether this trend will stop or whether the demand for stable coins will increase again in the future. The combination of Fiat currencies and other assets continues to make this type of cryptocurrencies attractive, in particular due to its better liquidity support.