What’s Driving The Demand Behind Stablecoin’s $10B Crypto Market Cap Milestone?

Tony "The Bull" Severino

5 years ago

3 mins read

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The growth of stablecoins in 2020 has been unlike anything seen before. Each week, more and more of the fiat-backed crypto assets are printed, nearly as fast and as often as the Federal Reserve is printing new cash.

After the latest boost, the total stablecoin market cap has achieved a milestone of $10 billion. But what’s driving the continued dramatic surge in demand?

Stablecoin Market Cap Reaches Over $10 Billion

All throughout 2020, stablecoins have achieved major milestone after milestone.

Following a strong crash in May, the stablecoin known as Tether “flippened” XRP for the third-ranked slot in the total cryptocurrencies by market cap.

Just the amount of Tether circulating on the Ethereum blockchain alone recently beat out Bitcoin in daily transactions processed. Tether also exists on Omni-layer Bitcoin and Tron’s blockchain.

But it’s not just Tether that is growing. Joining Tether in seeing a major boom in new tokens being minted, are other rival stablecoins USD Coin, Paxos Standard, and others.

In total, stablecoins have reached a combined total market cap of $10 billion. This represents over 3.5% of the total cryptocurrency market cap.

Bitcoin currently commands a massive lead at over 65% dominance, but Ethereum itself isn’t too far ahead of the total stablecoin market cap at just $25 billion, and only over 9% of the total market dominance.

But what exactly is fueling this incredible demand for more and more stablecoins?

Stable coins blast through $10 billion market cap. Should we be concerned at all? pic.twitter.com/9Yg4usJgt6

— Mati (@MatiGreenspan) June 15, 2020

What Is Driving The Demand For The Fiat-Backed Cryptocurrency Coin?

Tether has shed the negative stigma that was once surrounding it to become a highly respected asset in the crypto space.

Stablecoins were primarily used as a flight to safety when the cryptocurrency asset class’ notorious volatility struck.

As crypto prices nosedive, traders cash out their BTC and ETH into Tether and other stablecoins, ride out the storm, and use them to buy back in at lower prices.

Because these assets are tied 1:1 to the dollar, they rarely fluctuate in value very significantly.

However, these assets have clearly found additional use cases that have caused demand to surge enough for new supply to be made on the regular.

Related Reading | Stablecoins Are Printing Almost As Fast As The Fed

Crypto assets are no longer crashing, so the demand is due to other reasons. Crypto users have begun using stablecoins to transfer from one wallet to another, due to the speed increase and lower fees associated with stablecoins over Bitcoin.

Their role in decentralized finance is also growing.

It’s sparked an entirely new era of cryptocurrencies that more closely mimic digital versions of the dollar than Bitcoin.

Global government superpowers are all scrambling to create their own native version of a stablecoin. China is just about ready to roll theirs out, while the US has only just started talking about doing so as part of their stimulus efforts.

Even Facebook attempted to launch its own Libra stablecoin, called Libra.

With so much competition, yet so much demand, and an extremely familiar exchange rate, stablecoins have a chance to be cryptocurrency’s killer app.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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