In a year filled with uncertainty in the cryptocurrency space, a new trend has been unraveling: a stablecoin exodus that has now lasted for 18 consecutive months and has seen the market dominance of stablecoins drop to 11.6%.
According to a report from CCData, the total market capitalization of the stablecoin sector in July was $124 billion amid a 18-month decline that affected most major stablecoins. While Pax Dollar (USDP), USD Coin (USDC) and Binance USD (BUSD) all saw declines, the largest stablecoin by market cap, Tether (USDT), has kept on growing.
Stablecoins are a class of cryptocurrencies that attempt to maintain price stability through a variety of methods. Most leading stablecoins are backed by fiat currencies, although others are backed by cryptocurrencies or commodities, or are based on algorithms.
The reasons behind the recent exodus aren’t entirely clear and could be multifaceted.
The suspension of fiat currency deposits on Binance.US following a lawsuit from the United States Securities and Exchange Commission alongside MakerDAO’s move to drop USDP from its reserves as it failed to accrue additional revenue impacted the sector.
Stablecoin trading volumes rose 10.9% to $406 billion in August, but activity on centralized exchanges is struggling, with overall trading volumes “on track” to continue to decline in September, per the CCData report.
CCData’s report points to the SEC lawsuits against leading cryptocurrency exchanges Binance and Coinbase and the race to list a spot Bitcoin (BTC) exchange-traded fund (ETF) as factors contributing to the increase in stablecoin trading volumes.
These factors suggest stablecoins are still acting as safe havens for investors, meaning the exodus could be related to other
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