Stablecoin Market Plunges to Lowest Point Since August 2021

In a recent report published by crypto analytics platform CCData on July 20, the market capitalization of stablecoins has reached its lowest point since August 2021 after enduring 16 consecutive months of decline. The report reveals that the total market capitalization of stablecoins has experienced a 0.82% drop during the first two weeks of July, reaching a value of $127 billion.

Adding to the concern, the stablecoin market share has also dwindled, falling from 10.5% to a mere 10.3% over the past six weeks. Among the top 10 stablecoins, Pax Dollar (USDP) appears to be the most severely affected, as its market capitalization plummeted by over 43% to reach just $563 million, marking its lowest value since December 2020.

CCData attributes a significant portion of this downturn to MakerDAO’s decision to eliminate $500 million worth of USDP from its reserves due to its inability to generate revenue. This move by MakerDAO has had a direct impact on USDP’s stability and market capitalization, causing a ripple effect in the stablecoin sector.

In contrast, Tether (USDT), the largest stablecoin by market capitalization, achieved an all-time high market capitalization of $83.8 billion on July 17, boosting its market share to 65.9%. The dominance of Tether in the market has increased despite the overall decline in the stablecoin sector.

Other major stablecoins such as USD Coin (USDC) and Binance USD (BUSD) have also experienced declines in their market capitalizations, with a decrease of 3.01% and 4.57%, respectively. USDC has seen its market capitalization decrease for the seventh consecutive month, reaching its lowest value since June 2021.

Interestingly, despite the continuous decline, the trading volume of stablecoins witnessed a surprising 16.6% surge, amounting to approximately $483 billion during June. CCData speculates that the surge in trading volume could be attributed to lawsuits against major platforms like Binance and Coinbase by the Securities and Exchange Commission (SEC), as well as various prominent companies joining the race for a Bitcoin ETF.

Moreover, decentralized stablecoins, including Dai (DAI), Frax (FRAX), and USDD (USDD), experienced a slight increase of 0.43% in total market capitalization, reaching $7.52 billion in July.

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