Ethereum

Stablecoin

Bitcoin

Terra

<ul> 
 <li><i>Stablecoin market cap was $129.5 billion at press time, compared to $139 billion in December 2022.</i></li> 
 <li><em>Ethereum lost 27% of its stablecoin market cap since the beginning of the bear market.</em></li> 
</ul> 
<p>Many experts believe that the ongoing rally, which began in mid-October, marks the beginning of an extended bull market for the crypto assets market.</p> 
<p>Indeed, top cryptos, including <a href="https://eng.ambcrypto.com/search/BITCOIN" target="_blank" rel="noopener" data-wpel-link="internal">Bitcoin [BTC]</a>, have been successful in reclaiming pre-bear market levels.</p> 
<p>Generally, such a period is characterized by a strong influx of stablecoins. This is because most traders would use stablecoins to enter and exit trades on crypto exchanges.</p> 
<p>However, the reality was a bit different. As per AMBCrypto’s analysis of DeFiLlama’s data,&nbsp;the overall value of stablecoins failed to increase appreciably despite a significant pump in the market.</p> 
<h4>Stablecoin supply remains suppressed</h4> 
<p>The total market cap of all stablecoins in circulation was $129.5 billion as of this writing, as compared to $139 billion in December 2022.</p> 
<div id="attachment_359538" style="width: 100%" class="wp-caption aligncenter">
 <a href="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Stablecoin-market-cap.jpg" data-wpel-link="internal"><img aria-describedby="caption-attachment-359538" decoding="async" class="size-full wp-image-359538" src="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Stablecoin-market-cap.jpg" alt="" width="729" height="385" srcset="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Stablecoin-market-cap.jpg 729w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/Stablecoin-market-cap-300x158.jpg 300w" sizes="(max-width: 729px) 100vw, 729px"></a>
 <p id="caption-attachment-359538" class="wp-caption-text">Source: DeFiLlama</p>
</div> 
<p>The stablecoin market began to decline after the dramatic collapse of <a href="https://ambcrypto.com/?s=ust" target="_blank" rel="noopener" data-wpel-link="internal">Terra USD [UST]</a>&nbsp;last year. With sentiment in the broader market turning bearish, trading activity declined, and with it, the demand for stablecoins.</p> 
<p>To get a sense of the damage done, the stablecoin market value peaked at $188 billion in the weeks preceding the UST implosion. At press time, its value was 31% less than the peak.</p> 
<h4>Is capital not flowing from TradFi?</h4> 
<p>The total supply of stablecoins on crypto exchanges was still significantly lower when compared to last year.</p> 
<p>As per AMBCrypto’s examination of CryptoQuant’s data, 16.9 billion ERC-20 stablecoins were held in exchange wallets as of this writing, compared to 30 billion during the same time last year.</p> 
<div id="attachment_359544" style="width: 100%" class="wp-caption aligncenter">
 <a href="https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges.png" data-wpel-link="internal"><img aria-describedby="caption-attachment-359544" decoding="async" class="size-full wp-image-359544" src="https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges.png" alt="" width="2560" height="1612" srcset="https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges.png 2560w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges-300x189.png 300w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges-1024x645.png 1024w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges-768x484.png 768w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges-1536x967.png 1536w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/All-StablecoinsERC20-Exchange-Reserve-All-Exchanges-2048x1290.png 2048w" sizes="(max-width: 2560px) 100vw, 2560px"></a>
 <p id="caption-attachment-359544" class="wp-caption-text">Source: CryptoQuant</p>
</div> 
<p>Typically, a spike in stablecoin exchange reserves indicates strong buying pressure and bullish sentiment in the market.</p> 
<p>The fact that stablecoins haven’t moved considerably towards trading platforms proved that the ongoing rally was not powered by capital from the traditional market.</p> 
<p>As explained earlier, stablecoins act as the bridge between the crypto market and the traditional market.</p> 
<p>Upon further analysis, <a href="https://eng.ambcrypto.com/search/ethereum" target="_blank" rel="noopener" data-wpel-link="internal">Ethereum [ETH]</a> was found to be one of the biggest losers in stablecoins. The chain lost 27% of its stablecoin market cap since the beginning of the bear market in May 2022, data from <a href="https://defillama.com/stablecoins/chains" target="_blank" rel="noopener nofollow external noreferrer" data-wpel-link="external">DeFiLlama</a> revealed.</p> 
<p>On the other hand, <a href="https://eng.ambcrypto.com/search/TRON" target="_blank" rel="noopener" data-wpel-link="internal">Tron [TRX]</a>, witnessed a 37% increase in stablecoin supply in the same period.</p> 
<div id="attachment_359549" style="width: 100%" class="wp-caption aligncenter">
 <a href="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Dominance.png" data-wpel-link="internal"><img aria-describedby="caption-attachment-359549" decoding="async" class="size-full wp-image-359549" src="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Dominance.png" alt="" width="734" height="387" srcset="https://statics.ambcrypto.com/wp-content/uploads/2023/12/Dominance.png 734w, https://statics.ambcrypto.com/wp-content/uploads/2023/12/Dominance-300x158.png 300w" sizes="(max-width: 734px) 100vw, 734px"></a>
 <p id="caption-attachment-359549" class="wp-caption-text">Source: DeFiLlama</p>
</div>

Stablecoins yet to recover despite market rebound – Why?

AMBCrypto

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