Stablecoin market capitalisation again exceeds $20 billion

This week, the total supply of stablecoins again surpassed the $20 billion mark, with about 79% accounted for by USDT. At the start of the year, that figure stood at $5 billion.

The $20 billion milestone in stablecoin capitalization had already been surpassed in September, after which there was a small decline in the metric.

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The growth in supply is partly explained by strong demand for the two largest stablecoins USDT and USD Coin (USDC), including in the DeFi sector. Traders use them to earn yields on non-custodial lending platforms.

Another factor, as Bitfinex’s chief technology officer Paolo Ardoino says, was the rapid growth of the cryptocurrency derivatives market – on most platforms traders must post collateral in stablecoins. One exception is the BitMEX exchange, where deposits are in bitcoins, but its market share relative to platforms that accept stablecoins is shrinking.

“I think one of the main drivers of growth is collateral for derivatives. The DeFi sector follows, accounting for about $1.5 billion in USDT, and we also see miners increasingly selling Bitcoin not for dollars, but for USDT,” Ardoino said.

Circle CEO Jeremy Allaire noted that traders favour stablecoins during price surges when there is a need to exit risky assets.

As reported earlier this week, the Centre consortium, of which Circle is a member, announced the launch of USDC on the Stellar blockchain. The launch is scheduled for the first quarter of 2021.

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