Stablecoins Market Rebounds to Highest Level Since April 2022

Stablecoin market capitalization reached $161 billion in May, its highest level since April 2022, reflecting an eight-month growth streak. This recovery follows the collapse of TerraUSD (USTC) in May 2023.

TL;DR

• Tether (USDT) remains the dominant stablecoin with a market cap of $111 billion, while USDC market cap rose for the sixth consecutive month to $32.6 billion.
• Centralized exchange trading volumes are down, potentially due to the recent Bitcoin halving event.
• PayPal launched its PYUSD stablecoin on Solana, offering “confidential transfers” for merchants.

Stablecoin Market Cap Surges

A new report by CCData reveals a significant rebound in the stablecoin market. The total market capitalization of stablecoins reached $161 billion in May, marking the highest level since April 2022. This eight-month growth streak signifies a recovery from the losses incurred after the collapse of the algorithmic stablecoin TerraUSD (USTC) in May 2023.

Tether and USDC Dominate

Tether (USDT) continues to be the leading stablecoin with a market capitalization of $111 billion, representing an all-time high. Circle’s USDC also experienced steady growth, with its market cap rising for the sixth consecutive month to $32.6 billion in May. This increase coincides with a recent surge in demand for USDC, as evidenced by its all-time high trading volume on centralized exchanges (CEXs) in March.

Centralized Exchange Volumes Dip

Despite the rising market cap, stablecoin trading volumes on CEXs have declined. As of May 23rd, only $829 billion has been traded, putting the month on track for a lower total compared to previous months. This decrease might be attributed to the recent Bitcoin halving event, which historically leads to a decline in trading activity on CEXs in the following two months.

BlackRock’s BUIDL Emerges

The report highlights the emergence of BlackRock’s tokenized fund token, BUIDL. Representing a share in their USD Institutional Digital Liquidity Fund, BUIDL surged 19.6% to $448 million, surpassing Franklin Templeton’s BENJI to become the largest tokenized treasury fund.

CBDC Adoption Lags

The report also explores Central Bank Digital Currencies (CBDCs). While the US House of Representatives passed a bill prohibiting the Federal Reserve from issuing CBDCs, the pilot program for Brazil’s digital currency, DREX, has been delayed to 2025 due to privacy concerns. Additionally, data from Nigeria reveals lackluster adoption of their e-Naira CBDC, with only a marginal increase in transactions since its launch in October 2021.

PayPal’s PYUSD on Solana

PayPal has announced the expansion of its PYUSD stablecoin to the Solana network. This move offers additional features like “confidential transfers” that allow merchants to hide transaction amounts from consumers while maintaining regulatory compliance.