Stablecoin Market Cap Booms to 24-Month Peak Despite Lower Dominance

Stablecoins on the Rise: Market Cap Hits 2-Year High Despite Lower Dominance

The market for stablecoins, cryptocurrencies pegged to a stable asset like the US dollar, is experiencing a resurgence. A recent report by CCData, a cryptocurrency analytics platform, reveals that the total market capitalization of stablecoins has reached its highest point since April 2022, following eight consecutive months of growth.

As of May 29, the total market capitalization of stablecoins reached $161 billion, reflecting a 0.63% increase since the beginning of the month. This growth coincides with a broader market sentiment shift, potentially fueled by the unexpected approval of a spot Ethereum ETF in the U.S.

Shifting Dominance

Interestingly, while the market cap of stablecoins is rising, their dominance within the overall crypto market is declining slightly. Stablecoin market dominance currently sits at 6.07%, down from 7% in March. This suggests that investors are regaining confidence in major crypto assets like Bitcoin and Ethereum.

Among individual stablecoins, Athena’s USDe stands out. Its market cap has been climbing for five consecutive months, reaching $2.61 billion in May. This growth is attributed to its increased use as collateral for perpetual trading on the Bybit exchange.

Tether Maintains Lead

Tether (USDT), the undisputed king of stablecoins, continues to hold the top spot with a market cap exceeding $111 billion as of May 29. This dominance further solidified with its market share reaching 69.3%.

BlackRock, a prominent investment management firm, made a splash in the stablecoin market with its tokenized fund token BUIDL. This token, representing a share in BlackRock’s USD Institutional Digital Liquidity Fund, surged by 19.6% to $448 million, surpassing Franklin Templeton’s BENJI to become the largest tokenized treasury fund.

USDC Sees Steady Growth

Circle’s USDC (USD Coin) also experienced steady growth, with its market cap reaching $32.6 billion in May. This increase aligns with a rise in demand, as evidenced by USDC pairs recording an all-time high monthly trading volume in March. Notably, USDC’s market share by trading volume has also risen for the second consecutive month, currently sitting at 8.27%.

The report highlights USDC’s growing presence on decentralized finance (DeFi) networks like Base and Solana. The percentage of USDC supply held on these chains has climbed to 9.29% and 7.78%, respectively.

Despite the overall market cap growth, stablecoin trading volumes on centralized exchanges witnessed a decline. In fact, May 23 saw a monthly low of $829 billion in trading activity on these platforms. This dip aligns with historical trends, where trading volumes have typically dropped in the two months following a Bitcoin halving event.

Recovery from Terra Luna Collapse

The CCData report concludes with a positive outlook on the stablecoin market. The total market capitalization has successfully recovered from the losses incurred during the collapse of the Terra Luna ecosystem and the near-complete de-pegging of its algorithmic stablecoin, TerraClassicUSD (USTC). This 17-month downtrend seems to be finally reversing, indicating renewed investor confidence in stablecoins.