Stablecoin supply has been increasing in U.S. dollar terms, but this growth is not impacting the overall market share of cryptocurrencies, according to a report released by JPMorgan on Wednesday. The bank’s analysis reveals that stablecoins have maintained a consistent share of the total cryptocurrency market capitalization this year.
Stablecoins, cryptocurrencies typically pegged to the U.S. dollar or other assets like gold, have seen their market cap rebound to $165 billion. This figure is approaching the previous high of $180 billion reached before the Terra/Luna collapse.
JPMorgan’s analysts, led by Nikolaos Panigirtzoglou, noted that despite the rise in stablecoin supply, their market share as a percentage of the total crypto market cap has remained relatively stable. The growth in stablecoin supply is primarily attributed to the overall increase in the digital asset market cap, driven by significant gains in the prices of major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH).
The report highlighted several factors contributing to the growth of stablecoins:
Increased Crypto Market Cap: The appreciation in Bitcoin and Ether prices has led to a larger overall market cap, boosting the use of stablecoins as collateral in crypto lending and borrowing, as well as in other transactions.
Spot Bitcoin ETFs: The launch of spot Bitcoin exchange-traded funds (ETFs) in the U.S. in January has driven greater use of stablecoins by investors accessing the crypto markets.
New Issuers and Products: The introduction of new stablecoin issuers and products, such as Ethena’s USDe, has also supported the growth of stablecoin supply.
Regulatory Developments: Regulatory clarity in Europe, following the implementation of the Markets in Crypto-Assets (MiCA) legislation on July 1, has attracted more investors to the stablecoin sector.
Overall, JPMorgan’s report suggests that while stablecoin supply is growing, it is not displacing other cryptocurrencies but rather reflecting the broader expansion of the digital asset market.
