The popularity of dollar-based stablecoins is growing fast. The market cap of USD stablecoins is over $165 billion. If the current growth rate continues, a new record will be broken during the summer. The stablecoin market peaked at $180 billion in April 2022.
The graphic below shows the development of the stablecoin market. The data can be viewed in more detail on The Block’s website.
The popularity of stablecoins peaked in 2022 thanks to the rapid growth of Terra UST stablecoin. UST peaked at a market cap of $14 billion before its catastrophic collapse in May 2022.
Binance’s stablecoin, BUSD, also grew strong in 2022. Its market capitalization rose to over $23 billion before a massive decline that started in the spring of 2023. The US Securities and Exchange Commission (SEC) attacked Paxos, the company managing BUSD, and forced the stablecoin out of the market.
The stablecoin market declined steadily from April 2022 until October 2023. Almost all operators lost market cap except Tether’s USDT. In recent years, the market-leading stablecoin has taken over an increasingly large part of the market.
The table below shows the ranking list of the stablecoin market.
| Stablecoin | Ticker | Market cap |
|---|---|---|
| Tether | USDT | $110 billion |
| USD Coin | USDC | $34 billion |
| Dai | DAI | $5,5 billion |
| First Digital USD | FDUSD | $3.6 billion |
| Ethena USD | USDe | $2.3 billion |
Tether is currently on a path of solid growth. The market cap of USDT has risen from $95 billion to $115 billion in 2024. At the same time, Tether is expanding its operations beyond the stablecoin business. The company has also become one of the biggest Bitcoin holders in the world.
The USD stablecoin market has seen some exciting activity during the previous year.
- PayPal launched a stablecoin in August 2023
- Ripple is planning to launch a stablecoin in 2024
- A completely new type of stablecoin, Ethena, is gaining popularity
The US dollar still dominates the stablecoin market by more than 99 percent. The market cap of euro-based stablecoins is just over 200 million dollars, a good tenth of one percent of the dollar market. The popularity of euro-based stablecoins is not growing significantly.
The total fiat-backed euro-stablecoin market saw a modest 5% decline in March, with Binance’s AEUR leading the downward movement with a 9m (15%) decline.
Here’s the #StateOfEuroStables as of 2 April 2024.👇 pic.twitter.com/DCRDD6vMDJ
— roinevirta.eth🦞 (@roinevirta) April 2, 2024
It will be interesting to see how the situation changes during the summer of 2024. Starting from July, there will be a change in the EU’s stablecoin regulation. Only regulated stablecoins can be offered in the EU region. The new regulation sets a strict framework for the stablecoin’s reserves, and the company must have a representative in an EU country.
For example, the OKX exchange removed other trading pairs than EUR and USDC from its customers in the European Economic Area. EU users may (at least initially) lose access to Tether’s liquidity, which would be a substantial blow for traders. Most of the global crypto liquidity is in USDT trading pairs.