Stablecoin Market Cap Reaches $138 Billion with 4.5% Monthly Volume Increase

The market capitalization of stablecoins has surged by 1.95%, reaching $138 billion in February, marking the fifth consecutive month of growth since September 2023.

A recent market analysis from the cryptocurrency data firm CCData reveals an increase in both market capitalization and trading volume for stablecoins.

In January, stablecoin volume on centralized exchanges (CEXs) climbed 4.54% to $1.05 trillion, the highest level recorded since December 2021.

Significantly, the market share of $FDUSD continued to grow in January, achieving 15.6%, bolstered by the popularity of the BTC-FDUSD trading pair on Binance.

Full Report: https://t.co/uR1uf3BuaZ pic.twitter.com/zs2LxbkFGz

— CCData (@CCData_io) February 22, 2024

As stated in the report, the stablecoin market capitalization exceeded $138 billion as of February 16, with indicators suggesting a stronger performance as the month progressed.

This increase represents five consecutive months of growth since the conclusion of Q3 2023, driven by substantial inflows into the cryptocurrency market. Such inflows have propelled stablecoins to their highest level since the beginning of 2023.

Concurrently, stablecoin trading volume expanded during the first two months of 2024. January’s trading volumes reached 1.04 trillion, marking the highest volume recorded on centralized exchanges (CEX) since December 2021.

Continued Decline in Stablecoin Dominance

The report suggested a higher figure for this month, noting a trading volume of $440 billion as of February 16. Despite the rising figures and activities for stablecoins, their overall market dominance fell from 8.15% to 7.09% this month.

This decline in dominance in February marks the sixth consecutive month of decreased overall market strength relative to other cryptocurrencies. This trend followed significant inflows into alternative cryptocurrencies, boosting their market capitalization to $1.97 trillion as institutional investments entered the market.

Tether (USDT) continues to lead the stablecoin market, with its market capitalization reaching $97.3 billion, reflecting a 1.23% increase over the past 30 days. This growth positions USDT dominance at 70.6%, followed by USDC and DAI.

“The market capitalization of USD Coin (USDC) increased for the third straight month, climbing 5.34% to $26.9 billion, marking the highest market capitalization since June 2023. Meanwhile, First Digital USD (FDUSD) saw its market capitalization rise by 12.5% to $2.44 billion, achieving a new all-time high for the stablecoin,” the report highlighted.

Growth of CBDC Development Alongside Stablecoin Market Capitalization

As the market capitalization of stablecoins rose, the use cases for Central Bank Digital Currencies (CBDC) expanded, with interest noted in various jurisdictions.

Countries with existing pilot projects have also investigated new use cases. On January 31, the Bank of Japan convened its first meeting regarding the digital yen, while other regions ramped up their activities.

“Additionally, the Sri Lankan Central Bank has revealed plans to explore a CBDC aimed at enhancing the nation’s financial inclusion and complementing cash usage, with executives targeting the end of 2024 for a potential launch,” the report mentioned.

Numerous reasons have been cited for the development of CBDCs, including the enhancement of cross-border payments amid the widespread adoption of cryptocurrencies over the past two years. However, many individuals and organizations have raised concerns about privacy within most CBDC models.

Last year, two data privacy agencies in the European Union cautioned about potential risks associated with CBDCs, as a fitting example. While government officials have downplayed these issues, policy observers have echoed similar apprehensions on a global scale.

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