- Overall Digital Asset Growth
- Factors Influencing Stablecoin Growth
- New Issuers and Legislative Clarity
The supply of stablecoins, measured in US dollars, is increasing, but this expansion is not a sign that stablecoins are taking over a larger portion of the cryptocurrency market. This is stated in a JPMorgan research report published on Wednesday.
Overall Digital Asset Growth
Stablecoins, a type of cryptocurrency typically pegged to the US dollar (though some are pegged to other currencies or assets like gold), have seen their market value rise to $165 billion, approaching the pre-Terra/Luna crash peak of $180 billion. JPMorgan analysts led by Nikolaos Panigirtzoglou emphasized that the stablecoin market share relative to the total crypto market capitalization remains largely unchanged.
Factors Influencing Stablecoin Growth
Several factors contribute to the growth of the stablecoin market. The significant price increases of Bitcoin and Ethereum this year have increased the overall crypto market cap, leading to higher demand for stablecoins, which are often used as collateral in various crypto transactions.
In addition, investors are increasingly turning to stablecoins to enter the crypto markets, especially after the launch of spot Bitcoin ETFs in the US in January. Representatives of the traditional financial sector are also increasingly interested in stablecoins.
New Issuers and Legislative Clarity
The emergence of new stablecoin issuers and products, such as Ethena’s USDe, has further fueled growth. Additionally, regulatory clarity provided by Europe’s Markets in Crypto Assets (MiCA) legislation, which came into effect on July 1, has attracted more investors to the stablecoin arena.
Thus, despite the increase in the supply of stablecoins, their market share in the cryptocurrency market remains unchanged. This is due to the growth of the overall digital asset volume and several factors influencing their supply and demand.
