Stablecoins, such as Tether (USDT) and USD Coin (USDC), are predicted to experience significant growth in the coming years, according to a recent report by alternative asset manager Brevan Howard Digital. The market for these cryptocurrencies is expected to expand to trillions of dollars in supply and hundreds of trillions of dollars in transaction value. This growth is attributed to the increased global access to the U.S. currency through stablecoins, which provide financial services to the unbanked and underbanked populations worldwide, offer an escape from high-inflation currencies, and drive innovation in global open-network money movement.
Stablecoins Attracting Attention from Major Players
The potential of stablecoins has not gone unnoticed, with payments giant PayPal launching its own stablecoin, PYUSD. This move highlights the immense opportunity in the stablecoin market and could potentially disrupt the global financial services industry.
Stablecoins Settling Trillions in Transactions
In 2022, stablecoins settled over $11 trillion in on-chain transactions, surpassing the volumes processed by PayPal and almost overtaking the payment volume of Visa. This demonstrates the potential for stablecoins to serve customers who are underserved by traditional financial institutions on a global scale. Over 25 million blockchain addresses hold more than $1 in stablecoins, a figure comparable to the number of accounts held by the fifth largest U.S. bank. The large number of small-dollar stablecoin holdings further emphasizes their potential to provide financial services to those who are not adequately served by traditional financial institutions.
Non-Speculative Use of Stablecoins
Stablecoin usage has displayed a low correlation with crypto exchange volumes, suggesting that a significant portion of stablecoin transaction volumes are likely being used for non-speculative purposes. This indicates that stablecoins are not merely tools for speculation in the cryptocurrency market, but are increasingly being used for everyday transactions and financial services.
Resilience in Market Downturns
Stablecoins have proven to be resilient during recent crypto market downturns. The total market cap of stablecoins dropped only about 24% from its peak, compared to a 57% decline for the total crypto market cap. This resilience demonstrates the stability of stablecoins in comparison to other cryptocurrencies, making them a more attractive option for those seeking a stable store of value in the digital asset space.
The Future of Stablecoins
As stablecoins continue to gain traction and adoption, their impact on the global financial landscape is expected to grow. With major players like PayPal entering the stablecoin market, it is clear that the potential for stablecoins to revolutionize financial services is immense. The ability of stablecoins to provide financial services to underserved populations, offer an alternative to high-inflation currencies, and drive innovation in global money movement makes them an essential component of the future of finance.
In conclusion, stablecoins are poised for significant growth in the coming years, with trillions of dollars in supply and hundreds of trillions of dollars in transaction value anticipated. The entrance of major players such as PayPal into the stablecoin market, coupled with the potential for stablecoins to provide financial services to underserved populations and drive innovation in global money movement, indicates that stablecoins are set to play a vital role in shaping the future of finance.
