Stablecoin Market Cap Drops Due to Reduced Trading Volume

    Over the last 14 months, there has been a significant drop in the total market capitalization of stablecoins, with a decline exceeding $50 billion.

    Defillama reports that the current market capitalization of stablecoins stands at $129 billion, which is a decrease from the May 2022 figure of over $186 billion, when Terra UST depegged.

    Stablecoins Experience 14 Consecutive Months of Decline

    According to CCData, the market capitalization of the stablecoin industry is currently at its lowest point since September 2021.

    Stablecoins Overview (Source: DeFillama)

    Even prior to the UST collapse, the stablecoin market had already been experiencing a decline. However, the crash accelerated this downward trend. CCData’s report showed that the total market capitalization of stablecoins fell by 0.45% in May, marking the 14th consecutive month of decline.

    Stablecoin’s Declining Volume (Source: CCData)

    In addition to the drop in market capitalization, there was also a significant decrease in trading volume for the asset in May. The volume fell by 40.6% to $460 billion, representing the lowest trading volume on centralized exchanges since December 2022.

    Despite the decline in trading volume and market capitalization, stablecoin’s market dominance has remained unaffected. In fact, its market dominance increased to 11.1% in May, up from 9.76% in April, although it is still below the all-time high of 16.6% recorded in December 2022.

    Tether USDT Continues to Hold Market Dominance

    Tether’s USDT is currently the largest stablecoin in terms of market capitalization, controlling 63.9% of the market – its highest share since December 2021. According to data from BeInCrypto, the circulating supply of stablecoin stands at $83.2 billion, which is very close to its all-time high of $83.7 billion.

    Tether USDT Market Cap (Source: BeInCrypto)

    The issuer of Tether USDT recently reported an excess reserve of $2.4 billion and announced that it would use 15% of its net realized operating profits to purchase Bitcoin.

    In the meantime, other stablecoins like TrueUSD (TUSD) and Gemini Dollar (GUSD) have witnessed an increase in their market capitalization. GUSD’s market cap has risen by 18.4% to $576 million, while TUSD has gained 3.82% to reach an all-time high of $2.07 billion.

    BUSD, USDC Slips

    While Tether USDT continues to dominate the stablecoin market, other major stablecoins have experienced declines in their market capitalization. Binance USD (BUSD) has seen its market cap fall for the sixth consecutive month, as Paxos continues to gradually wind down the digital asset. BUSD’s market cap has decreased by 11.9% to $5.48 billion.

    Similarly, Circle-backed USD Coin (USDC) has recorded a 3.5% drop in market capitalization and has fallen below $30 billion. The confidence of investors in USDC has been shaken following its exposure to the U.S. banking crisis.

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