- The total marketย cap of cryptoย stablecoins hasย decreased, reaching the weakestย point since September 2021.
- Volumeย ofย trading with cryptoย stablecoins has experienced a wholeย lotย of decline.
- The contraction of the cryptoย stablecoin market has signaled deteriorating liquidity.
In a disconcerting tendency for the recovery of digitalย currency prices, the cryptoย stablecoin market is poised to contract for the 14th consecutive 30ย days, signaling a draining of financialย resources from the digital investment space.ย
Digital investment data company CCData revealed in its recent market report that the total marketย cap of cryptoย stablecoins plummeted to $130 Billion in May, reaching its weakestย point since September 2021.ย
This ongoing decline, which began in March 2022, reportsย by CCData, raises concerns about the liquidity of cryptoย stablecoins and its implications for the broader cryptocurrency ecosystem.
Trading Volume Plunges 40.6%, Lowest Since December 2022
The CCData report outlines a drastic 40.6 percent plunge in volumeย ofย trading with cryptoย stablecoins theseย 30ย days, resulting in a mere $460 Billion volume on centralized exchanges. This marks the lowest monthly volume since December 2022.ย
The report impliesย that this decline in trading activity is aligned with major cryptocurrency assets remaining range-bound and failing to break through critical support and resistance levels.
Interestingly, amidst the overall market slump, TrueUSD (TUSD) cryptoย stablecoin has managed to defy the tendency, experiencing an boostย in volumeย ofย trading to $29 Billion so far theseย 30ย days, reportsย by CCData.ย
TUSD has surpassed its struggling competitors, USDC and BUSD, making it the Second most traded cryptoย stablecoin on centralized exchanges for the 1st time.ย
This resurgence can be attributed to Binanceย Cryptoย exchange, the worldโs dominant cryptocurrency exchange, which has actively promoted the use of TUSD on its platform by waiving trading charges for buying and selling Bitcoinย (BTC) using the stablecoin.
Cryptoย Stablecoin Market Must Stabilize for Cryptocurrency Prices to Recover
A recent report by banking behemoth JPMorgan highlighted that digitalย currency prices are unlikely to experience a sustained recovery until the cryptoย stablecoin market stabilizes.ย
Furthermore, a worldwide financing bank Goldmanย Sachsย Group report earlier this year likened the decline in cryptoย stablecoins to quantitative tightening for the cryptocurrency market, indicating diminishing liquidity and leverage.
The other side
- Althoughย while the cryptoย stablecoin market has been contracting for 14 consecutive months, itโsย notableย that the overall digitalย currency market has experienced wholeย lotย of growth and adoption during the same period.
- The decrease in volumeย ofย trading with cryptoย stablecoins mayย be partially stated by market participants exploring alternative trading methods and decentralized exchanges, which offer different liquidity dynamics and trading mechanisms.
- TrueUSDโs recent success canย potentially be attributed not only to promotional efforts by Binanceย Cryptoย exchange but likewise to the tokenโs unique features and advantages that have resonated with traders seeking alternatives to more established stablecoins.
Why This Matters
As a critical source of liquidity, cryptoย stablecoins play a critical role in facilitating digitalย currency trading and investment. The contraction of this market poses challenges for the recovery of digitalย currency prices, hindering sustained growth and highlighting the lingering effects of the bear market.ย
To learn more about the plummeting usage of USDT and its impact on the market, read here:
USDT Usage Plummets to 4-Year Low Regardlessย of Record Market Cap
To stay updated on the latest cryptocurrency and digital investment trends of 2023, as revealed in the Ripple report, read here:
Rippleโs Value Report Spotlights Key Trends in Cryptocurrency, Tokenization, and DeFi
