Stablecoin supply has decreased every month from UST’s demise in May 2023.
The stablecoin market is an excellent place to begin when attempting to summarize the previous several years in the cryptocurrency industry.
Total stablecoin supply on the market has dropped below $125 billion, severely impacting the vital liquidity sector of the business. That’s down from a high of $188 billion on the eve of Terra’s collapse in May of last year, a drop of 33%.
The market has continued to shrink after the notorious Terra collapse, which saw $18 billion in UST not-so-stablecoin vanish into thin air. Stablecoin supply has been decreasing every month since, mirroring the tightening of financial conditions throughout the economy.
To see the changes in more detail, just click the “play timeline” button below. If we divide the total supply into the most liquid stablecoins, we see that almost every currency has taken a significant impact. Well, almost; Tether is the conspicuous exception.
Tether has regained an absolute majority of the market share, which is odd considering the controversy surrounding its unclear reserves. The European stablecoin has been able to avoid the severe regulatory crackdown in the US and scoop up some of the capital that has fled from rivals such as UST and BUSD since their respective regulatory shutdowns in February and March, respectively.
It has a massive 67% market share right now. The market cap firm announced a staggering $1 billion operational profit in Q2 alone, mostly attributable to the hefty rates now offered via US Treasuries.
Tether may be in a good position to capitalize on the difficulties that have hampered its competitors, but the issue in the stablecoin market is indicative of the broader problems with cryptocurrencies.
Volatility is near record lows as a direct result of the precipitous drop in liquidity and volumes. A restrictive monetary climate and multiple scandals within the crypto realm have harmed an industry that grew swiftly during the zero-rate, money-printing bonanza of the COVID period, causing a massive outflow of wealth.
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