Stablecoin Growth Reflects Increased Crypto Market Cap – JP Morgan
A recent report from the US investment bank JP Morgan, indicates that the stablecoin supply has been surging relative to the USD without taking over the crypto market share. According to JP Morgan, the surge in stablecoin supply reflects the growing crypto market capitalization with investors trooping into the Stablecoin space.
Stablecoin Market Resurgence
The market share of stablecoins as a percentage of the total cryptocurrency market capitalization has not changed significantly. According to an analysis by Nikolaos Panigirtzoglou, the market cap for all stablecoins has jumped to $165 billion; it was close to $180 billion before the Terra/Luna collapse.
Several factors contribute to the rising market value of stablecoins, such as the rising costs of the main cryptocurrencies and the growing use of stablecoins in different industries. This year, the notable surges in the value of high-cap crypto assets such as Ethereum (ETH) and Bitcoin (BTC) have also been instrumental in increasing the market’s total value.
Since these leading digital assets are frequently used as collateral in cryptocurrency lending, borrowing, and other transactions within the crypto ecosystem, they have caused an increase in the supply of stablecoins.
Other Factors
Furthermore, the launch of spot Bitcoin exchange-traded funds (ETFs) in the US at the start of the year has prompted more investors to use stablecoins to gain exposure to the crypto market. These virtual currencies attract novice and experienced investors because they provide a safe way to gain exposure to the erratic cryptocurrency market.
Moreover, traditional financial institutions interested in gaining exposure to digital assets are showing interest in stablecoins, demonstrating the demand for them outside the cryptocurrency space. The rise of innovative products and new stablecoin issuers has also aided in expanding this market.
For example, the recently released stablecoin USDe from Ethena. European regulatory clarity has further reinforced investor confidence, especially after the Markets in Crypto-Assets (MiCA) legislation took effect on July 1. This regulatory framework has drawn more money into the stablecoin market by giving investors much-needed direction.
Bybit’s Stablecoin Expansion
In a related development, Bybit, a leading cryptocurrency exchange, recently declared that it will now support more Solana-based assets. Also, an August 15 press release states that PayPal’s PYUSD stablecoin has been added to the Solana ecosystem.
Recent DefiLlama data showed that PYUSD, the sixth-largest stablecoin by market capitalization, has increased by 30.7% monthly, demonstrating impressive month-over-month growth. In her remarks on the listing, Emily Bao, Head of Web3 and SBU at Bybit, noted that PYUSD’s impressive performance on the Solana blockchain highlights the market’s appetite for a safe, regulated stablecoin that can keep up with the quickly developing decentralized finance (DeFi) industry.
Being the first big financial company to introduce its stablecoin, PayPal’s PYUSD launch in August 2023 marked a significant milestone in the stablecoin market. PYUSD uses token extensions, which add native Web3 capabilities that improve payment functionality, showing how well Solana performs in supporting the global payments network.
PYUSD’s Growing Adoption
PYUSD has been gaining traction in the digital finance industry since its launch. The stablecoin’s journey hasn’t been without difficulties, though. A few months following PYUSD’s launch, PayPal disclosed that it had been served with an investigative subpoena by the US Securities and Exchange Commission (SEC).
Although the company did not provide specifics, this development highlighted the regulatory scrutiny regarding stablecoin initiatives.
According to Bybit, PYUSD has surpassed the milestone of 500,000 processed transactions, demonstrating the benefits of this expansion. DefiLlama reports that Solana currently holds more than 54% of the PYUSD’s market liquidity, with the remaining 46% being Ethereum.
This distribution shows how PYUSD is becoming increasingly integrated into different financial applications and has the potential to be a major player in digital finance. It is worth noting that PYUSD was incorporated into the Solana ecosystem in May 2024.
Along with popular centralized stablecoins like USDC and USDT, PYUSD has grown on the network due to its addition to the pools of decentralized exchanges in the Solana network, notably Jupiter and Orca.
