Stablecoin capitalization is at a two-year high and has been generally on the rise all year. What is the reason for the growth? And who benefits from it?
1. Increased interest of institutional investors in the cryptocurrency market. Stablecoins are often used as an “entry gate” for large players.
2. Overall recovery of the cryptocurrency market after the 2022 downturn. When the entire market goes up, stablecoin demand for trading also increases.
3. Stablecoins are viewed as a more stable asset compared to volatile cryptocurrencies. Amid economic uncertainty, investors often switch to stablecoins.
4. Stablecoins are actively used for lending, liquidity, and other financial transactions in the DeFi sector.
5. Improving the reputation of leading stablecoins (especially USDT) after checks and audits.
Who benefits from this growth:
1. Stablecoin issuers (Tether, Circle, etc.), who earn more fees and expand their influence.
2. Cryptocurrency exchanges, as increased liquidity contributes to higher trading volumes.
3. DeFi projects, which receive more liquidity for their protocols.
4. Institutional investors, who can more effectively manage risks and perform transactions in the cryptocurrency market.
5. Retail traders, who receive more opportunities for trading and investing.
However, it should be noted that excessive growth of stablecoins may raise regulatory concerns regarding their impact on the traditional financial system.