As 2024 continues to unfold and unprecedented new developments in the crypto space, such as the launch of spot Bitcoin and Ethereum ETFs, another trend is emerging: the 10th consecutive month of stablecoin growth, with stablecoin market dominance rising to 6.93%.
Stablecoins are a type of cryptocurrency whose value is pegged to a reserve asset, such as fiat currency or a commodity. Their stability distinguishes them from the frequent price volatility associated with cryptocurrencies such as Bitcoin (BTC) or Ether (ETH).
According to a CCData report, the overall stablecoin market cap increased by 2.11% in July to reach $164 billion, as major stablecoins enjoyed a 10-month surge.
The largest stablecoin by market cap, Tether (USDT), continued to grow, rising 1.61% to $116 billion. This is a new all-time high for a stablecoin, marking the 11th consecutive month of market cap growth. USDT’s market dominance is now at 69.6%.
Other major stablecoins, including USD Coin (USDC), BlackRock’s BUIDL, and PayPal USD (PYUSD), have seen gains, while First Digital USD (FDUSD) and Ethena USDe have seen declines in market cap.
“PayPal USD was the biggest gainer among the top 10 stablecoins, rising 17.9% to $589 million, a new all-time high for stablecoins.”
According to a CCData report, stablecoin trading volumes fell 8.35% in July to $795 billion. This was due to sluggish activity on centralized exchanges, while overall trading volumes are “on track to hit a new monthly record following the launch of a spot Ethereum ETF and bullish sentiment toward the industry expressed at last week’s Bitcoin 2024 conference.”
The CCData report noted that recent MiCA regulations have raised concerns about the future of USDT in Europe, which is a factor in the decline in stablecoin trading activity on centralized exchanges.
“This regulation enhances market security by requiring stablecoin issuers to secure a cryptocurrency license and maintain significant reserves. Major stablecoins such as Circle’s USDC and EURC have already complied.”
Accordingly, USD Coin continues to dominate trading activity on centralized exchanges, with trading activity for USDC pairs increasing significantly.
Related: Tether Reports Record Profit of $5.2 Billion in H1 2024
USDC’s Rise
One of the most important findings from the CCData report is the surge in market cap and trading volume for USD Coin, the second-largest stablecoin by market cap.
The report notes that USDC has a 73.5% market share among the top 10 stablecoins by market cap.
“The volume of USDC pairs on central exchanges increased by 48.1% to $135 billion, driven by stablecoins’ MiCA compliance following the European regulation that came into effect late last month.”
In a post on X on July 31, crypto firm Bankless provided an in-depth look at the Solana ecosystem, explaining why USDC has seen such recent growth.
“Circle’s USDC dominates Solana’s stablecoin market, accounting for roughly 70% of the chain’s total stablecoin supply,” Bankless declared, adding that this week Solana’s USDC trading volume was 19:1 compared to USDT, and “higher than the top 20 ERC tokens combined.”
Bankless explained that USDC’s dominance on Solana is due to Circle and the Solana Foundation’s strategy of incentivizing developers and facilitating integrations with exchange platforms.
The analysis cites developer grants from platforms like Solend Protocol and Superteam, which were provided by USDC, which have attracted more developers to layer 1 blockchains. Others include Circle’s Cross Chain Transfer Protocol (CCTP) and Circle’s Web3 service, both launched on Solana, which aim to integrate DeFi and “establish USDC as the leading stablecoin on Solana.”
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