The market capitalization of all stablecoins has grown to $323.112 billion, with USDT accounting for 58.69% of this total. Additionally, over the past month, USDT has increased by about $5 billion.
Although this represents a significant hike from 2020, when the stablecoin market’s value was “just” approximately $5 billion, the growth appears to have slowed down significantly.
This is because during the same time period, the combined supply of USDC, USDe, and PYUSD fell by about $4.2 billion.
This is clearly evident in the average stablecoin supply by Visa on-chain analytics, with the same highlighting how USDT has been dominant throughout.
What’s behind the slow growth?
Ethena USDe saw one of the biggest drops. Over the month, its supply fell by 28%. Since the year began, it has declined by almost 34% too.
Meanwhile, some of the outflows were absorbed by smaller stablecoin initiatives. Users looking for alternative yield opportunities drove moderate inflows into the USDS.
In a similar vein, USD1 increased in value as interest in politically connected cryptocurrency projects and dollar-backed digital assets improved.
PayPal USD, on the other hand, has kept losing ground even with PayPal’s support.
Its supply dropped by 13% during the month, indicating that in a stablecoin market that is highly competitive and dominated by established players, institutional and retail adoption might still be moving more slowly than anticipated.
How is the FUD and “yield-bearing” debate pulling back the stablecoin market?
This happened on the heels of the Senate Banking Committee passing the CLARITY Act during a markup session on 14 May by a vote of 15 to 9.
And yet, adoption among TradFi institutions has been slow for years thanks to the FUD surrounding stablecoins. More recently, there is an ongoing worry about the possible effects of “yield-bearing” stablecoins, stating that they may upset established banking models.
For instance, JPMorgan Chase CFO Jeremy Barnum has issued a warning about the dangers of permitting stablecoins to provide yield. Therefore, in light of this, it appears improbable that the CLARITY Act will pass soon.
Final Summary
- The stablecoin market has been growing, but overall momentum seems to be slowing down.
- All together, major stablecoins like PayPal USD, Ethena USDe, and USD Coin lost billions of dollars in supply.
