Stablecoins are a vital cog in the crypto economy, and this fact has only been confirmed by the ongoing bear market. The two leading stablecoins in the market, USDT Tether and USDC Circle, have shown parabolic growth in their market capitalization this year and have become the de facto settlement currencies in the crypto industry.
The collapse of Terra and its dollar-pegged algorithmic stablecoin, UST, resulted in a significant jump in trading volumes in USDT and USDC. However, USDC and USDT have been under constant pressure since the events around the Terra ecosystem, and USDT in particular has faced an unprecedented amount of redemption. At the same time, rumors about possible difficulties for the two stablecoins have led to the heads of the respective companies intervening on social media several times.
The latest statistics available seem to show a strong consolidation of stablecoin positions. Indeed, according to CoinMetrics, more than $7 trillion worth of transactions were concluded using stablecoins in 2022. For comparison, in 2021, 6 trillion transactions were made using stablecoins, and a year earlier this figure was only $1,000 billion.
A comparison of stablecoin settlements with major credit cards by Peter Johnson, head of Brevan Howard Digital, shows that the growth outlook for stablecoins is very positive. Indeed, stablecoin settlements could reach $9 trillion in 2023, putting them in second place behind the world’s largest card network, Visa, which processes around $12 trillion in value per year. Some predict that on-chain volume will exceed not only Visa, but the total volume of the four major card networks – Visa, MasterCard, American Express and Discover.
In any case, even if the cost of stablecoin transactions remains unchanged next year, it will almost exceed the cost of all other major settlement providers individually, including Mastercard, American Express and Discover.
Mastercard, the second-largest card issuer in the world, has processed around $2.2 trillion in 2022, far less than the combined estimated value of the top seven stablecoins in the market. For example, American Express settled about $1 trillion this year, while Discover settled less than $200 billion in transactions.
In terms of market cap, stablecoins make up 16.5% of the entire crypto industry. USDT has a market share of 47% with a capitalization of approximately $66 billion, while USDC has a market share of 31% with a market capitalization of approximately $44 billion.
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