Stablecoin Market Surges to $160 Billion, Marking Post-Terra Collapse High
The market capitalization of stablecoins, cryptocurrencies pegged to fiat currencies like the US dollar, has reached $160 billion this week. This milestone signifies a significant recovery for the stablecoin market, reaching a level last seen in May 2022, just before the dramatic collapse of Terra’s UST stablecoin.
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Stablecoin Market Booms: Supply Growth Drives Expansion
Since December 2023, the stablecoin market has witnessed a substantial increase of $28.63 billion. This surge can be attributed to the rising supply of several dollar-pegged coins, with major players like Tether (USDT) and USD Coin (USDC) experiencing significant growth. Tether, the industry leader, boasts a market cap of $109.9 billion, while USDC sits at $34 billion. Notably, both coins witnessed a supply increase exceeding 5% in the last month.
Ethena’s USDe Leads Growth Spurt
While established players dominate the market, newer entrants are also making their mark. Ethena’s USDe, launched less than six months ago, has seen the most impressive growth among major stablecoins. Its supply surged by a staggering 86.8%, pushing its market valuation to $2.37 billion. First Digital’s FDUSD also enjoyed a significant rise, with its market cap reaching $3.74 billion after a 43% growth in supply over the past month.
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Stablecoins Recover Despite Terra’s Shadow
The current boom comes just over two years after the devastating collapse of Terra’s UST stablecoin in May 2022. Back then, UST lost its $1 peg, triggering widespread panic and a domino effect that sent the LUNA token, once a top-10 cryptocurrency, plummeting by 96% in a single day. While the Terra fiasco cast a long shadow, the current market growth indicates a renewed investor confidence in stablecoins.
So, is this $UST depeg in the room with us right now?
No?
I prescribe 24 hours of pegging over the next 7 days pic.twitter.com/GsBss7ACit
— Do Kwon 🌕 (@stablekwon) May 8, 2022
The Road Ahead: Stablecoins Poised for Continued Growth
The substantial growth in the stablecoin market signifies a potential turning point for these fiat-backed crypto assets. As they reach new milestones and gain wider adoption, stablecoins are likely to play a crucial role in the future of the cryptocurrency landscape.
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Dr. Olajide Samuel juggles the demands of medical studies with a passion for cryptocurrency. A seasoned blogger, Olajide shares his vast global knowledge of the crypto space, offering insights to enthusiasts. Despite his busy schedule, his commitment to crypto remains strong, and he actively seeks ways to contribute to its future.
