Crypto Report: an in-depth analysis of the world of stablecoins

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In this article we delve into the discussion of stablecoins within the cryptocurrency market, thanks to CCData‘s report.

We take a look at how the capitalization and trading volume of this niche sector has evolved over the past year and which are the 10 most dominant stablecoins.

We also take a look at the new cryptocurrency tied to the value of the dollar launched by payment provider PayPal.

Full details below.

Crypto report: market capitalization and trading volume of stablecoins

The stablecoin industry has evolved a great deal since 2017, when the entire market was worth only a few million dollars and was not established.

To date, the market capitalization of this department registers a value of as much as $123.5 billion, with ample prospects for future growth given the ever-increasing use cases that are emerging.

Despite the evolution of the stablecoin world over the past 6 years, there is a slowdown in the trend starting in May 2022.

From that period until now, we have observed a slow retrenchment of the sector, with 17 consecutive months of decreasing market capitalization.

In August, the metric fell 1.28% from July reaching its lowest value since August 2021.

On the other hand, as far as volumes are concerned, which are fundamental to observe in order to understand the amount of trading that is done with “stable” cryptocurrencies, we can observe a figure of $453 billion as far as July is concerned.

This value, although it may seem high, represents the second lowest of the year on a monthly basis, down 6.14% from June and the third lowest since April 2019.

In itself this figure means nothing and should be put in context with the current market outlook, where Bitcoin has also posted extremely low trading volumes in recent weeks of trading. Interest in the cryptocurrency sector in general is low right now, and large investors are positioned on other asset classes for now.

As for August, up to the 13th day, $194 billion has been transacted, with projections for the last 15 days similar to those of the previous month.

USDT, TUSD and USDC lead the trading volume in recent months.

Top 10 crypto assets pegged to the value of the US dollar

The decline in recent months observed in the entire stablecoin industry is also reflected in the top 10 cryptocurrencies in this niche, whose capitalization continues to slowly decline while registering little activity on CEXs and in DeFi.

Tether (USDT), the stablecoin that leads the rankings with a dominance of 67%, also marked a decrease in its market value, albeit only by 0.62%, in the last month. This is the first negative month for the currency since October 2022, which currently records a capitalization of $83.3 billion.

Since the beginning of the year it has grown a lot, with an increase of about $13 billion.

The majority of what USDT has gained has been lost by the other big stablecoins in the sector, with USDC, TUSD and BUSD seeing heavy declines in their capitalization since the beginning of the year.

Over the past 3 months, the situation for USDC seems to be more or less stable with a decrease of 1.82% from the previous month, while TUSD and BUSD have seen the most significant declines: -9.15% and -9.35% respectively during July.

Making its entry into the top 10 list of the most highly rated stablecoins is First Digital USD (FDUSD), which was launched on 26 July.

In less than a month it has seen a 1410% growth in its market cap reaching $305 million and earning the #10 rank in the market, surpassing Liquity USD (LUSD)

FSUSD’s growth is due to the push from the cryptocurrency exchange Binance, where it has seen fertile ground for traders to use the currency as a trading counterparty by taking advantage of the zero fees promotion since listing day.

The trading volume of this stablecoin reached $507 million in August: a very high figure considering that it represents the 5th currency pegged to the value of the dollar on Binance.

Currently the USDT-FDUSD pair is the most active one with a trading volume of $437 million, The other trading pairs are with BTC, ETH, BNB and BUSD but more are expected to come soon.

PYUSD: PayPal’s stablecoin

It is very interesting to mention that a few days ago the electronic payments giant PayPal launched its own stablecoin on the Ethereum blockchain called PYUSD.

This particular currency, in addition to having a big name behind it, enjoys transaction efficiency, programmable capacity, and the presence of the Swift system.

PYUSD’s fully diluted capitalization is still decidedly low, standing at $27 million

At the same time, PayPal in the last four months recorded a total payment volume (TPV) of $377 billion.

If the company’s stablecoin were to capture even 1% of these exchanges in the coming months, it would achieve a volume of $3.77 billion and enter the top 10 of cryptocurrencies with stable value.

Precisely with regard to PayPal’s stablecoin, it is interesting to point out that two Bank of America analysts have expressed a not entirely positive opinion of this currency.

Specifically, Alkesh Shah, head of global strategy for cryptocurrencies and digital assets, and Andrew Moss, the bank’s global digital asset strategist, believe that the adoption of PYUSD may not be as quick and mainstream as thought.

Its advent may have stumped regulators around the world who are now unsure how to deal with stablecoin from a regulatory perspective.

In addition, the growth of the CBDC industry could put PYUSD in a bad light and slow its growth.

In any case, Bank of America believes that stablecoin improves the payment efficiency of the PayPal provider.

In reference to the aforementioned CBDCs, it is very interesting to note that e-CNY, or Digital Yuan, has reached a transaction value of $248 billion as of June 2023.

The entire supply of e-CNY, or 16.5 billion in cryptocurrency, represents 0.16% of China’s currency supply.