Stablecoin dominance eroded as market cap falls to 2-year low: CCData

A new report states that the market capitalization of stablecoins has dropped to its lowest level since August 2021, falling for 16 consecutive months.

CCData, a cryptocurrency analytics platform, released a reports On July 20, said stablecoin market cap fell by 0.82% from the start of the month to July 17, bringing the market cap of the sector to $127 billion.

Stablecoin market dominance declined slightly and currently stands at 10.3%, down from 10.5% in June.

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Main idea:
✔️Stablecoin market cap declines for 16 months, now at $127bn
$USDT at $0.73, $USDC at $0.82 #binance.We
$USDPBiggest drop in cap since 2020, now $593mn

full report https://t.co/A9rFx6pbJx

– CCData (@CCData_io) 20 July 2023

Of the top ten stablecoins, the PAX dollar (USDP) suffered the most, plunging 43.1% to $563 million in July – the lowest figure since December 2020.

CCData believes that the decline was primarily attributed to MakerDAO – a decentralized autonomous organization behind the Maker Protocol – which decided to remove $500 million of USDP from its reserves as it failed to earn additional revenue.

Tether (USDT), the largest stablecoin by market cap, managed to record its all-time high market cap of $83.8 billion as of July 17, increasing its stablecoin market cap dominance to 65.9%.

The market cap of USD Coin (USDC) and Binance USD (BUSD) fell by 3.01% and 4.57% to $26.9 billion and $3.96 billion, respectively. For USDC, this is the seventh consecutive month of decline in its market cap and the lowest since June 2021.

Despite continuing declines, stablecoin trading volume increased by 16.6% in June to nearly $483 billion, marking the first monthly increase since March.

CCData believes that Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase and an increase in spot bitcoin (BTC) exchange-traded fund filings contributed to an increase in stablecoin trading volumes last month.

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Another major event in June was the suspension of fiat deposits on Binance.US due to the SEC’s lawsuit against the company. CCData said this caused USDT and USDC to lose less than the US dollar on the exchange.

“The suspension of fiat deposits (USDT and USDC) led to a significant drop in the liquidity of the stablecoins, resulting in a discount of 27% and 18%, respectively.”

The decentralized stablecoin market, which includes Dai (DAI), Frax (FRX) and USDD (USDD), increased its market capitalization by 0.43% to $7.52 billion in July – the first positive month since February. However, the market cap is still down 78.1% from its all-time high of $34.3 billion in April.

The decline was triggered by the collapse of the Terra Luna ecosystem and the almost 100% drop in the algorithmic stablecoin TeraClassicUSD (USTC).

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