The stablecoin market has reached a new all-time high, surpassing its previous peak set in March 2022. According to DefiLlama, the total market capitalization of stablecoins (excluding algorithmic stablecoins) has now reached $168 billion, marking an 11-month streak of consecutive growth.
Crypto Analyst Sees Influx of New Money
Crypto analyst Patrick Scott, also known as “Dynamo DeFi,” believes that this surge in market cap is indicative of new money entering the cryptocurrency space. He noted that retail investors have been active in the market for at least eight months, suggesting that institutional investment might also be playing a role in the rally.
Tether Continues to Lead the Pack
Tether (USDT) remains the dominant stablecoin, accounting for a significant portion of the market’s total capitalization. It has consistently gained ground throughout 2024, reaching a new high of over $117 billion in August.
USD Coin and PayPal USD Also Gain Momentum
Circle’s USD Coin (USDC) has also seen a positive year, reaching a market cap of over $34 billion. While this is its highest point for 2024, it is still below its all-time high of $55.8 billion.
PayPal USD (PYUSD) has made significant strides, surpassing the $1 billion market cap barrier. Its growth has been particularly notable on the Solana network, where its supply has increased by a staggering 171% in just one month.
Challenges and Opportunities Ahead
Despite the positive developments, the stablecoin market faces challenges. The recent decline in stablecoin trading volumes on centralized exchanges, partially attributed to regulatory concerns, could impact overall market activity.
Additionally, the long-term sustainability of PayPal USD’s growth depends on factors such as the continuation of incentives and its ability to compete with established players like USDT and USDC.