There are always worthwhile developments in the broader cryptocurrency industry. Stablecoins are a favored asset among many, yet the vertical is subject to ebbs and flows. For example, USDT has lost almost a quarter of its market cap – and circulating supply – since May 2022.
USDT Is Losing Momentum
It may seem strange to think of stablecoins as “popular” crypto assets. However, these currencies, like Tether’s USDT, USDC Coin, and Binance USD – are all in the top 10 of cryptocurrencies by market capitalization. Unlike traditional cryptos, they cannot fluctuate in value and provide a digital representation of fiat currencies. In these three cases, a digital US Dollar.
As these stablecoins provide tremendous liquidity, they have become the de facto trading pair for major cryptocurrencies like BTC and ETH. Moreover, every notable cryptocurrency has trading pairs in USDT, USDC, or BUSD on at least one exchange. Overall, demand for direct fiat currency gateways to buy crypto assets has taken a backseat since these currencies were introduced.
Even so, it remains crucial to monitor the circulating supply of stablecoins. Their circulating supply equals the market cap and, therefore, their popularity. For example, Tether’s USDT dominates the market with a 47.17% representation. However, its market cap has dwindled from over $83 billion to below $69 billion. That trend started in May 2022, and the overall numbers continue to decrease.
A strange development, as Tether’s stablecoin is the go-to pegged currency in crypto land. It is accessible on various networks, including Ethereum, Tron, BNB Chain, Solana, and Polygon. However, the overall demand for USDT is declining, and its overall market cap must follow suit. That near 20% decrease is worrisome and highlights less risk appetite for trading crypto.
Other Stablecoins Have A Similar Trend
One may think Tether’s asset is the only one going downhill in circulation. Sadly, that is not the case. The stablecoins market cap is barely above $146 billion, whereas it hovered near $200 billion less than six months ago. An ongoing bear market is a logical outcome. Even so, there is more going on than meets the eye.
The market cap for USD Coin (USDC), Binance USD (BUSD), and DAI (DAI) looks identical. However, BUSD sees its market cap recover slowly. That is mainly due to Binance converting other stablecoin deposits into a unified BUSD balance on its exchange. Whether that is a sensible decision remains a matter of opinion.
For USD Coin, the market cap drop-off is relatively big. It peaked above $56.1 billion on June 20, 2022. Today, its market cap is just above $44 billion. That, too, is a 20% decline, although the Binance situation may somewhat influence it. Even then, the increase in BUSD does not replace the “missing” USDT and USDC, as Binance’s decision was made mere weeks ago.
Besides these top stablecoins, there is little interest in other pegged assets. For example, Frax lost roughly 20% of its market cap, as did TrueUSD (TUSD). The only asset noting a near equilibrium is Pax Dollar (USDP), with a market cap of roughly $900 million.
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