Stablecoin Market Cap Hits $161 Billion, Hits Two-Year High: CCData

In May 2024, the stablecoin ecosystem bounced back, reaching a market cap of $161 billion, a 0.63% increase since the beginning of the month.

According to CCData, this is the highest level since April 2022, after eight months of steady growth.

Tether Dominates as Stablecoin Market Recovers

Although the stablecoin market has increased, its dominance fell slightly from 7% in March to 6.07% this month. The fall was due to the price recovery of crypto assets after the unexpected approval of the Ethereum ETF in the United States.

Also, on May 23, stablecoin trading volumes on the Centralized Exchanges (CEX) were at a low of $829 billion. The report noted that after the Bitcoin halving event in April, trading activity on CEXs in general has been historically low.

The largest of the cohort, Tether (USDT), hit a record $111 billion market capitalization on May 29, increasing its dominance in the stablecoin industry to 69.3%.

Among the top ten stablecoins, Athena USDe’s market capitalization rose for the fifth month, growing 11.6% to $2.61 billion. CCData attributes this increase to its expanded use as collateral for perpetual trading on Bybit.

BlackRock’s tokenized fund BUIDL rose 19.6% to $448 million, making it the largest treasury fund and surpassing Franklin Templeton’s BENJI. In particular, BUIDL represents a stake in BlackRock’s USD Institutional Digital Liquidity Fund.

The report also highlights Circle’s USDC market cap increase for the sixth consecutive month, reaching $32.6 billion in May. This increase coincides with increased demand, as USDC pairs recorded an all-time high monthly trading volume in March. USDC market share by trading volume increased for the second month to 8.27%.

In addition, Circle’s stablecoin has benefited from increased on-chain trading activity on networks such as Base and Solana. USDC supply percentage on these chains increased to 9.29% on Base and 7.78% on Solana.

Stablecoin Market Recovery Amid Regulatory Uncertainty

The report highlights the recovery of the stablecoin market after losses due to the collapse of the Terra Luna ecosystem and the delinking of the algorithmic stablecoin TerraClassicUSD (USTC), starting a seventeen-month downtrend.

He also points to recent developments regarding the possible withdrawal of USDT pairs from platforms such as Kraken due to the upcoming MiCA regulations. While concerns were raised about MiCA compliance, Kraken clarified that there were no immediate plans to retire USDT.

However, European exchanges such as OKX announced their intention to phase out USDT pairs in response to MiCA regulations, including transaction limits below €200 million.

Regarding central bank digital currencies (CBDCs), the report stated that while the US House passed a bill banning the Federal Reserve from issuing CBDCs, Brazil’s DREX digital currency pilot program it was postponed until 2025 due to privacy concerns. Furthermore, Nigeria’s adoption of e-Naira CBDC remains lackluster, with only marginal transaction increases since its launch in October 2021.

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