Record Increase in Aggregate Stablecoin Supply
According to Glassnode data, there has been a significant $4.1 billion monthly increase in the aggregate supply of stablecoins, reaching a 21-month high. This surge in fiat-pegged cryptocurrencies has been driven by the bullish momentum following Bitcoin’s price rise. As of January 18, the aggregated stablecoin market cap stood at over $128 billion, marking the largest inflow since March 2022.
Market Dominance and Ranking of Stablecoins
Tether’s USDT dominates the stablecoin market with a market share of nearly 73%. The second-largest stablecoin is Circle USD Coin (USDC) with a 19% share. Binance USD (BUSD) issued by Paxos ranks third. MakerDAO’s DAI and TUSD are also included in Glassnode’s report.
The Significance of Stablecoin Pool
The collective pool of stablecoins plays a crucial role in cryptocurrency transactions on centralized platforms like Coinbase and decentralized exchanges such as Uniswap. The supply and market cap progression of stablecoins are often used to gauge market sentiment, with increases typically indicating a bullish outlook.
Increase in Illicit Transactions Involving Stablecoins
A report by Chainalysis on Crypto Crime Trends highlights a shift in criminal activity related to stablecoins, coinciding with an increase in transactions and supply. The research reveals that stablecoins account for approximately 60% of illicit transactions over a two-year period.
However, this trend is primarily driven by sanctions-related volume and scam inflows, rather than the use of stablecoins for ransomware and darknet markets.
Chainalysis Crypto Crime Trends report
Issuers like Tether have the ability to freeze accounts and collaborate closely with law enforcement, making them more compliant compared to decentralized protocols. Tether’s operator has already deactivated more than 30 addresses associated with suspicious transactions in Israel and Ukraine. Despite a 30% decline in illicit finance involving Bitcoin since 2021, its high liquidity continues to make it the preferred choice for bad actors.
Hot Take: Stablecoin Supply Surges to New Heights
The recent surge in the aggregate stablecoin supply, reaching a 21-month high, reflects the growing popularity and importance of stablecoins in the cryptocurrency market. With Tether leading the way and accounting for a significant market share, stablecoins play a vital role in facilitating transactions on both centralized and decentralized platforms. However, concerns arise as illicit transactions involving stablecoins increase, highlighting the need for stricter regulations and closer collaboration between stablecoin issuers and law enforcement agencies.
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