Exceptional Year for Digital Assets in 2023
In 2023, digital assets had a remarkable year, with Bitcoin prices surging by over 172% and experiencing a correction of less than 20%. Stablecoins also saw positive capital inflows alongside Bitcoin and Ether.
Stablecoins in 2023
The global market capitalization of stablecoins has exceeded $100 billion in the past two years, with USDT alone accounting for over $90 billion. The growth is driven by their use in decentralized finance (DeFi), trading, and liquidity management.
Despite controversies, stablecoins have become the preferred quote currency for traders and a significant source of market liquidity, according to Glassnode’s analysis.
Turning Point for Stablecoin Supplies
The aggregate supply of stablecoins has been decreasing since March 2022 due to regulatory pressures, capital rotation, and diminishing investor interest. However, October marked a turning point as total stablecoin supplies hit a low at $120 billion and started growing at a monthly rate of up to 3%, indicating a resurgence of investor interest.
“The relative dominance between various stablecoins has also undergone significant shifts between 2022 and 2023.”
Stablecoin Lobbying Efforts
Stablecoins serve as a bridge between the crypto and traditional financial systems, attracting attention from the Biden administration and bipartisan congressional lawmakers. Tether allocated $760,000 for lobbying in the first three quarters of 2023, while Circle Internet Financial increased its lobbying spending to $300,000. Coinbase invested $2 million in lobbying activities with a focus on stablecoins. Traditional financial entities like Bank of America and Visa have also contributed to lobbying efforts.
Hot Take: Stablecoins Gain Momentum in 2023
In 2023, stablecoins gained significant momentum as they emerged as a preferred quote currency for traders and a vital source of market liquidity. Despite regulatory challenges and controversies, stablecoins experienced a turning point in October, with supplies hitting a low and starting to grow again. This resurgence of interest indicates the continued relevance and potential of stablecoins in the digital asset market. Furthermore, stablecoin lobbying efforts have attracted attention from both the government and traditional financial entities, highlighting the growing influence and importance of these digital assets in bridging the gap between crypto and traditional finance.
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