The combined market cap of three leading stablecoins – cryptocurrencies linked to an asset – has more than tripled from the beginning of the year and hit over $110 bln this week, according to market research.
In the wake of growing interest in the crypto market, stablecoins Tether, USD Coin and Binance USD, as the world’s top three stablecoins, saw their market capitalisation surge by 158%, 400% and a whopping 742%, respectively, based on a survey conducted by MejoresApuestas.com.
Tether’s market cap jumped over $68 bln
Unlike other cryptocurrencies, stablecoins are relatively less volatile, and their value is determined differently.
For example, the price of Bitcoin mainly follows demand and supply, or how many coins are being mined and how many investors want to buy the crypto. On the other hand, stablecoins are connected to the price of an altogether different asset.
Tether’s USDT, for instance, is connected to the price development of the US dollar. If the US dollar falls in the FX market, so does the USDT. However, the price of the fourth-largest crypto by market cap spiked in 2021.
The CoinMarketCap data revealed that Tether’s market cap jumped by 158% year-to-date, rising from $26.5 bln in January to $68.3 bln this week. Also, as the world’s most traded cryptocurrency, Tether saw its trading volume increase by 35% last month.
In July, the world’s most used stable coin hit $1.48 trln in monthly trading volume. Statistics show this figure hit over $2 trln in August.
Binance saw biggest increase
Stablecoins are essential for two areas in digital payments that do not prefer volatility. One of them is the Decentralised Finance (DeFi) market that relies on cryptocurrencies for payments and loans.
Also, they are seen as the inspiration for so-called CBDC or Central Bank Digital Currencies, like China’s e-CNY currency or the digital euro, an electronic form of money issued by the Eurosystem.
Although far behind Tether as the world’s leading stablecoin, USD Coin has seen much more significant market cap growth this year. Statistics show the market capitalisation of the second-largest stablecoin surged by nearly 400% over the past nine months, reaching $29.2 bln this week.
Still, that was nearly twice less compared to Binance USD growth this year.
In January, the combined value of all Binance USD coins stood at $1.48 bln or almost 18 times less than the leading Tether. However, this figure soared to $12.5 bln, showing an impressive 742% growth year-to-date.