Stablecoins are an integral part of the crypto market. Especially during volatile market periods, they are a safe haven.
That’s why some stablecoins are an early form of RWAs. For example, when they peg to fiat. Other stables are more decentralized and use a different mechanism to peg. Let’s take a look at the current state of stablecoins.
Source: CoinGecko report
In 2024, fiat-back stablecoins surged to a $161.2 billion market cap. That’s an impressive feat, however, it’s still below the 2021 peak of $181.7 billion. The top ten of fiat-back coins saw some impressive growth. For example, during the 2020-2021 bull run, their market cap grew 3,121.7%.
However, 94% of the total market cap is in the hands of only three coins. These are $USDT with a $114.4 billion share, $USDC with $33.3 billion, and $DAI with a $5.3 billion share.
These stablecoins grew by 18.1% this year. That’s $1.3 billion. These coins saw a 212x since 2020. However, that’s still only 0.8% of fiat-backed stables. Furthermore, only two assets make up 78% of this market. These are Tether Gold ($XAUT) and PAX Gold ($PAXG).
Besides precious metals, there was also an Uranium308 project that launched a stable. Unfortunately, this has already become inactive.
Stablecoins make up a decent amount of global market cap. That’s no less than 8.2%. This dominance increases when the market shows weakness. Investors tend to convert their crypto assets into stablecoins during these times. That’s because these coins are less prone to market volatility.
During Terra’s $UST growth, in 2021 and 2022, dominance grew to 15.6%. However, it crashed after the $UST collapse. During the recent bear market, it surged again to 18.2%.
There are almost 9 million addresses that hold stablecoins. To be precise, that number is currently 8.7 million. Also, here, $USDT, $USDC, and $DAI remain the three most popular stables. No less than 971% of wallets holds a combination of these three stables.
$USDT shows up in 5.8 million wallets. That’s 2.6 times more than $USDC, which sits at #2. You can find $DAI in 505,000 wallets. So, out of the top ten, eight stables have less than 1 million holders.
Many stables can’t manage to hold their peg. That’s still a struggle for many of them. This is especially an issue during times of high volatility. The only three coins that manage to maintain their peg are the top 3 stables. So, we’re looking once more at $USDT, $USDC, and $DAI.
Partial algorithmic stables seem to have the most issues with keep the peg. This does include $DAI as well. They use market arbitrage to keep their peg.
Stablecoins are an integral part of the crypto market. During volatile market periods, they are a safe haven. They protect investors from such volatility. We looked at the current market, inspired by a CoinGecko report.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
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