Stablecoins have been on a wild ride. After Terraform’s $UST debacle, the market cap for these digital assets plummeted 35%, dropping from a $189 billion peak to $124 billion. 📉
Vaidya Pallasena from Bluechip attributes this to dwindling retail participation and the rise in US treasury yields since mid-2022. With risk-free yields of around 5%, the allure of holding stablecoins has diminished.
Nic Carter of Castle Island Ventures simplifies the narrative. As traditional finance rates surpassed crypto yields in 2022, stablecoins began their retreat to fiat. He predicts this trend might persist until conventional rates decrease or crypto yields in DeFi staking see an uptick.
The market’s heavyweights? $USDT, $USDC, $DAI, $TUSD, and $BUSD together command over 95% of the market cap. USDT, despite past challenges, now boasts an $83 billion market cap, handling 67% of the stablecoin sector’s volume.
In contrast, USDC and other US-native stablecoins have hit multi-year lows due to US regulatory pressures. The beneficiary? Non-US stablecoins, with USDT leading the charge. 🚀