Journalist
Posted:
- The stablecoins market cap recently surged to over $121 billion.
- USDT and USDC currently hold over 80% of the stablecoins market cap.
Despite stablecoins being a favored cryptocurrency, their recent performance could be more stable. New data indicated a decline in their market capitalization over the past few months. What could be behind this decline?
Slight increase in stablecoins market capitalization
Data from Santiment revealed a modest uptick in the market capitalization of stablecoins following the earlier decline. According to the Santiment post, the combined market caps have grown by over $600 million since August 22.
At the time of the Santiment post, the market cap stood at approximately $121.2 billion. However, as of this writing, the market cap has slightly decreased to around $121.1 billion.
Source: Santiment
Furthermore, an analysis of the market cap chart indicated that the market cap surged to over $163 billion around February. It maintained this level until approximately May 2022, after which it gradually declined, eventually reaching its current volume.
Some possible reasons for the sharp decline in the stablecoins market cap
The decline in the market capitalization of stablecoins can be attributed to several factors, with one particular event aligning with the observed decline on the Santiment chart. In May 2022, the price of TerraUSD (UST), an algorithmic stablecoin with an intended $1 peg, fluctuated and dropped to 35 cents.
Simultaneously, its companion token, LUNA, designed to stabilize UST’s price, plummeted from $80 to just a few cents. The collapse of the Terra stablecoin significantly impacted the overall stablecoin market capitalization.
Furthermore, as the market appeared to be stabilizing, another significant crash occurred, this time involving an exchange. In November, the FTX exchange experienced a collapse that sent shockwaves throughout the crypto space. Examining the chart, it becomes evident that the market cap started declining following this period.
The most recent event affecting the market cap was an announcement by Paxos. Paxos revealed its decision to cease minting the Binance stablecoin, BUSD, due to regulatory issues it faced. Consequently, the market cap of BUSD has been in decline. Additionally, the exchange recently announced plans to discontinue BUSD trading pairs and deposits.
USDT and USDC still lead the pack
The Santiment chart indicated that the current market capitalization of stablecoins was approximately $121 billion. CoinMarketCap data revealed that Tether (USDT) and Circle (USDC) collectively accounted for over 80% of the total stablecoins market capitalization.
As of this writing, USDT boasts a market cap exceeding $82 billion, while USDC’s cap exceeds $26 billion.
