Stablecoin

BUSD

Terra

USDC

The overall stablecoin market has witnessed a staggering 35% dip in the past year and a half.
Terraform’s <a href="https://crypto.news/what-happened-to-terra-luna-journey-from-crypto-kings-to-fallen-stars/" target="_blank" rel="noopener noreferrer nofollow">collapse</a> last year and the subsequent fall of its native Terra USD (UST) stablecoin triggered a chain reaction, which caused the valuation of the stablecoin sector to shrink from $189 billion in May 2022 to a mere $123 billion presently, per <a href="https://defillama.com/stablecoins" target="_blank" rel="noopener noreferrer nofollow">data</a> from DefiLlama.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true">
 🔍 Stablecoin Diversity &amp; Market Risks 📈 As of now, the cumulative market cap of <a href="https://twitter.com/hashtag/stablecoins?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">#stablecoins</a> stands at a staggering ~$123 billion according to <a href="https://twitter.com/coingecko?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">@coingecko</a> and <a href="https://twitter.com/DefiLlama?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">@DefiLlama</a>. Dive with us deeper 🧵👇 <a href="https://t.co/QEZSgM0XFb" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/QEZSgM0XFb</a>— GSU | Protocol (⚖️,🌍) (@GSUcoin) <a href="https://twitter.com/GSUcoin/status/1709576078782611610?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">October 4, 2023</a>
 </blockquote>
 <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 </div>
</figure>
According to analysts, the daily trading volumes of stablecoins have also been on a downward trajectory, nosediving from a peak of $150–300 billion to a mere $50 billion.
Some, like Bluechip co-founder Vaidya Pallasena, attribute this dip to various factors, including the <a href="https://crypto.news/the-crypto-market-reacts-as-fed-hikes-by-25-bps/" target="_blank" rel="noopener noreferrer nofollow">surge</a> in U.S. Treasury yields since mid-2022, which made it difficult to justify the high opportunity cost of holding stablecoins. Others, like Castle Island Ventures’ Nic Carter, pinned the cause on rates in traditional finance exceeding crypto returns.
You might also like: <a href="https://crypto.news/binance-research-reports-stablecoins-on-a-continuous-decline-in-monthly-report/" rel="noopener noreferrer nofollow"> Binance Research reports stablecoins on a continuous decline in monthly report </a>
DefiLlama data shows that 95% of the value of the stablecoin market is concentrated around a few assets, including Tether (USDT), USD Coin (USDC), Dai (DAI), True USD (TUSD), and Binance USD (BUSD).
USDT, despite <a href="https://www.binance.com/en/feed/post/689636" target="_blank" rel="noopener noreferrer nofollow">depegging</a> concerns from earlier in the year, boasts an $83 billion market cap and dominates 67% of the stablecoin sector’s volume. On the other hand, USDC has suffered a significant blow, <a href="https://crypto.news/usdc-market-cap-hits-two-year-low-even-after-coinbase-stake/" target="_blank" rel="noopener noreferrer nofollow">plummeting</a> to multi-year lows even after Coinbase bought a minority stake in the stablecoin.
Despite accounting for only 10% of the total market share of the crypto industry, stablecoins constitute up to 80% of all settlement activity on blockchains, making them extremely important to the digital asset ecosystem.
The dollar-pegged cryptocurrencies have also been on the wrong end of U.S. regulatory efforts. Earlier in the year, BUSD fell afoul of the New York State Department of Financial Services (NYDFS), with the regulator <a href="https://www.cnbc.com/2023/02/13/paxos-ordered-to-cease-minting-binance-stablecoin-by-new-york-regulator.html" target="_blank" rel="noopener noreferrer nofollow">ordering</a> Paxos to stop issuing new BUSD tokens for allegedly flouting investor protection laws.&nbsp;
From being the third-largest stablecoin after USDT and USDC and boasting a market cap north of $16 billion, BUSD now ranks fifth, with a valuation of $2.2 billion, according to DefiLlama.
Read more: <a href="https://crypto.news/coinbase-increases-usdc-interest-rate-after-sec-confirms-stance-on-stablecoins/" rel="noopener noreferrer nofollow"> Coinbase increases USDC interest rate after SEC confirms stance on stablecoins </a>

Stablecoin market cap down 35% 18 months after Terra collapse

crypto.news

Other articles published on Oct 8, 2023

The Whale, Who Profited $54 Million from BNB, Made New Trades Today

Stars Arena secures funding to address security breach

Signs of Recovery from Stars Arena Executives After Hack: Announcing Two New Deals

Strategi Investasi Ala Tim Draper: Bitcoin dan Kecerdasan Buatan (AI)

BRICS vs. dollar: The power play that awaits sanction lifting

OKX reacts to new UK crypto regulations, reduces listed tokens

Join our free newsletter for daily crypto updates!