Stablecoin Market Plummets: Market Cap Hits 14-Month Low, Dips Below $130B

StableCoin Market

Stablecoin market needs more stability to sustain. Many factors indicate the potential decline in pegged cryptocurrencies. The drop in stablecoins’ overall market capitalization created a 14-month long streak. Recently the market cap broke the $130 billion level. Earlier banking giant JPMorgan also expressed concerns of efficacies of the digital assets shrinking on the overall crypto market. 

According to the CoinMarketCap data, the market capitalization of the stablecoin sector is approx $129.54 billion, at the press time. Last time it was at the similar level during September 2021. The trading volume stands at $35.61 billion USD in the last 24 hours. 

Since March 2022, the stablecoin market cap has struggled to sustain growth. Last year’s crypto crash and long crypto winter equally affected the sector. Though the broader cryptocurrency market surged with the start of this year, the space was still waiting for a push. Before I could make a move, the global crypto market retreated.

The continued surge made the global cryptocurrency market capitalization reach up to $1.26 trillion in April this year. Later it slid below  $1.10 trillion and is currently stalling at $1.01 trillion.  

In its report released on Thursday, the banking giant JPMorgan Chase noted the stablecoin market continues to face contraction. Until the sector stops losing its dominance, the broader crypto market would find it difficult to recover soon. 

The concern surfaces given the utilities stablecoins offer in the broader crypto market. Their value remains fixed and pegged to the entity—fiat currencies like dollar, gold or any other commodity. 

This asset class provides a convenience of trading cryptocurrencies while remaining within the ecosystem without taking a complete exit to move to other crypto assets. For general purposes including cross-border transactions, the assets offer relatively faster and cheaper ways than fiat currencies. 

JPMorgan analyst, Nikolaos Panigirtzoglou, wrote in the report that the stablecoin universe is carrying the burden of unsettling chaos across industry. Last year’s crypto crash, continued regulatory crackdown on crypto entities in the United States, trembling banking sector, etc. continues to affect the growth. 

Tether (USDT) holds the top position with the market cap of over $83 billion at present. Second to USDT stands USD Coin (USDC) with a $29.14 billion, then follows Binance USD (BUSD) with $5.33 billion market cap.

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