Stablecoin market witnesses steady decrease in value over 17 months

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In a trend that has been unfolding for the past 17 months, the collective value of stablecoins in the market has been on a consistent decline.

The most recent data from CCData reveals that the total market value of stablecoins has reached its lowest point since August 2021, standing at $124 billion.

This downward trajectory in stablecoin market capitalization has not only sparked discussions among financial analysts but has also sparked ripples in the trading volumes of these stable digital assets.

Notably, the trading volume for stablecoins took a significant hit in July, plummeting to its second-lowest value for the year at a mere $453 billion.

Stablecoin market
Credits: DefiLlama

Market Behavior and Influence on Stablecoins

CCData, a reputable data provider in the cryptocurrency sphere, attributes this substantial decline to the relatively subdued behavior of the market, particularly in relation to major cryptocurrencies like Bitcoin and Ethereum.

These usually volatile assets have entered an unusual phase of minimal fluctuations, showcasing levels of stability not witnessed in multiple years.

Read More: PayPal introduces a stablecoin to simplify payments in digital age

At the forefront of the stablecoin trading volume is Tether (USDT), which contributes a staggering $2.8 trillion to the total trading volume. Despite facing certain challenges, other prominent stablecoins such as Binance USD (BUSD) and Circle’s USD Coin (USDC) have managed to collectively amass a trading volume of $898 billion.

Impressive Surge: First Digital USD (FDUSD)

Interestingly, amidst the general decline in the stablecoin market, First Digital USD (FDUSD), listed on the Binance exchange, has experienced an astonishing surge.

The circulating supply of FDUSD has soared by an impressive 1410%, now holding a value of $305 million. This remarkable increase occurred in less than a month after the stablecoin’s initial launch on the crypto exchange.

Binance’s Approach and Supply Breakdown

Binance’s representative commented in July that the company actively promoted the adoption of FDUSD due to its conviction in the benefits it could offer to customers seeking a broader range of stablecoin options. In response, the exchange introduced several features to incentivize the use of FDUSD on its platform.

Breaking down the supply figures, around $280 million of the total $305 million supply of FDUSD was generated on the Ethereum (ETH) network. In contrast, the remaining $25 million was minted on the Binance Smart Chain (BSC) network, as reported by DeFillama.