The Declining Stablecoin Market
The stablecoin market has been experiencing a continuous decline in market capitalization for the past 16 months. In July, the market cap fell by 0.82% to reach $127 billion, the lowest level since August 2021. Additionally, the market cap dominance of stablecoins dropped from 10.5% to 10.3% in July. However, there was a positive development in terms of trading volume, which surged by over 16% to $483 billion in June, marking the first increase since March.
Possible Factors for Increased Trading Volume
The rise in trading volume can be attributed to the market’s volatility caused by the lawsuits against Coinbase and Binance filed by the SEC. Furthermore, the spot Bitcoin ETF applications submitted by traditional finance companies like BlackRock and WisdomTree may have also contributed to the uptick in trading activity.
USDT’s Dominance and the Plunge of USDC and BUSD
In July, USDT emerged as the dominant stablecoin, reaching an all-time high market cap of $83.8 billion, accounting for over 65% of the total stablecoins by market cap. On the other hand, USDC and BUSD experienced significant declines in market cap, dropping by 3.01% and 4.57% to $26.9 billion and $3.96 billion, respectively. This downward trend marks the seventh consecutive month of decline for Circle-backed stablecoin USDC, which faced challenges in investor confidence due to banking issues.
Hot Take: Volatility and Dominance Shifts in the Stablecoin Market
The declining market capitalization of stablecoins, coupled with the increase in trading volume, highlights the volatility and shifting dynamics in the crypto market. The lawsuits against major crypto exchanges and the involvement of traditional finance players through Bitcoin ETF applications have contributed to these fluctuations. While USDT maintains its dominance, other stablecoins like USDC and BUSD are facing challenges. These trends indicate the need for investors to closely monitor the stablecoin market and adapt to the evolving landscape.