Stablecoin Market Capitalization Hits $138 Billion as Volume Grows by 4.5% this Month

The crypto market is heating up, with stablecoin market capitalization and trading volume reaching new highs in February. Image by iQoncept, Adobe.

The stablecoin market capitalization has soared 1.95% to hit $138 billion in February recording a fifth consecutive monthly growth since September 2023.

A new market report by cryptocurrency analytics firm CCData shows a stablecoin market capitalization and trading volume rise.

Stablecoin volume on CEXs rose 4.54% to $1.05tn in January, its highest level since December 2021.

Notably, $FDUSD’s market share continued to rise in January, reaching 15.6%, aided by the popularity of the BTC-FDUSD pair on Binance.

Full Report: https://t.co/uR1uf3BuaZ pic.twitter.com/zs2LxbkFGz

— CCData (@CCData_io) February 22, 2024

According to the release, the stablecoin market capitalization breached $138 billion as of February 16, with indices showing a stronger performance towards the end of the month.

The growth marks a fifth consecutive month increase since the end of Q3 2023 with high inflows into the cryptocurrency market. This inflow has pushed stablecoins to their highest point since the start of 2023.

At the same time, stablecoin trading volume grew in the first two months of 2024. Trading volumes hit 1.04 trillion in January, marking the highest volume point on centralized exchanges (CEX) since December 2021.

Stablecoin Dominance Plunge Continues

The report hinted at a higher figure this month as a result of $440 billion in trading volume recorded as of February 16. Although stablecoins saw increasing figures and activities, their overall market dominance plunged from 8.15% to 7.09% this month.

The decline in dominance in February is its sixth straight month of reduced overall market strength when compared with other cryptocurrencies. This came on the heels of the massive inflow into other cryptocurrencies, increasing their market cap to $1.97 trillion as institutional inflows came into the market.

Tether (USDT) maintains its lead on the stablecoin market with its market cap hitting $97.3 billion, a 1.23% rise in the last 30 days. This growth places USDT dominance at 70.6%, followed by USDC and DAI.

“The market capitalization of USD Coin (USDC) rose for the third consecutive month, rising 5.34% to $26.9bn, recording the highest market capitalization since June 2023. Meanwhile, the market capitalization of First Digital USD (FDUSD) rose 12.5% to $2.44bn, recording a new all-time high for the stablecoin,” the report noted.

CBDC Development Grows Alongside Stablecoin Market Capitalization

As the stablecoins market capitalization rose, use cases for Central Bank Digital Currencies (CBDC) grew, with interest recorded in several jurisdictions.

Countries with existing pilot projects also explored new use cases. On January 31, the Bank of Japan held the first digital yen meeting, with more activities in other regions.

“Meanwhile, the Sri Lankan Central Bank announced plans to explore a CBDC to improve the country’s financial inclusion and complement cash use, with executives eyeing the end of 2024 as a potential launch date,” the report added.

Several justifications have been given for CBDCs, including to improve cross-border payments amid the mass adoption of cryptocurrencies, in the past two years. However, many people and organizations have flagged privacy concerns in most CBDC models.

Last year, two European Union data privacy agencies warned of a possible risk involving CBDCs, fit example. Although government officials downplayed issues, policy watchers have also raised similar concerns globally.

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