Study finds market share of algorithmic stablecoins fell tenfold

The share of algorithmic stablecoins in the ‘stablecoins’ segment plummeted from 12.4% just before the TerraUSD crash in April 2022 to the current 1.71%. Such estimates were provided by CryptoCompare.

At the peak, UST accounted for 79.8% of the algorithmic-stablecoin market.

Overall, the market capitalisation of ‘stablecoins’ has declined for the tenth consecutive month. In December 2022, centralized platforms recorded outflows of $3.65 billion. Experts linked it to concerns about Binance’s solvency.

“The decline in stablecoin dominance indicates that market participants are converting funds into riskier assets,” explained the analysts.

USDT retains a leading position with a market share of 48.7% — a peak not seen since October 2021. The asset’s market capitalization stands at $66.7 billion (up 0.82%), followed by USDC and BUSD with $43.1 billion (-2.27%) and $16.1 billion (-3.97%), respectively.

In the study, experts also touched on the “stablecoin war” after Coinbase introduced in December 2022 zero-fee transfers for transferring Tether to USDC. Prior to that, Binance rolled out automatic conversion of USDC, USDP and TrueUSD into BUSD.

Earlier, Bank of America researchers recognized in digital currencies, CBDC and stablecoins the natural evolution of money and payments. A similar view was also presented by Visa CEO Alfred Kelly.

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