Stablecoins came as a savior to those who feared the volatile nature of cryptocurrencies. While the market cap of stablecoins has been significantly increasing, the trading volume of these assets has plummeted throughout the Q2 of 2020.
Top Five Stablecoins Account For 48.3% Increase In Market Cap
The crypto industry has garnered immense traction as well as adoption over the years. Individuals across the globe have been investing or venturing into the crypto-verse in huge numbers. However, some still remain skeptical about entering the field citing the volatile nature of cryptocurrencies. Stablecoins came as a ray of hope to those who were concerned about the extreme volatility cryptocurrencies.
Stabelcoins have become immensely popular over time. CoinGecko’s latest quarterly report explores the advancements in stablecoins during the second quarter of 2020. As per the report, the top five stabelcoins including, USDT, USDC, PAX, TUSD as well as BUSD accounted for $3.65 billion of market cap. This was reportedly a 48.3 percent increase since the first quarter. This surge was mostly fueled by the largest stablecoin, Tether [USDT] as it recorded a 54 percent increase with an addition of $3.38 billion.
USDC wasn’t far behind as the stablecoin witnessed a $293 million addition which was a 42 percent increase since the last quarter.
Even though the market cap of stablecoins surged significantly, the trading volume of these assets had plummeted. The report further elaborated on the possible reason behind this and stated,
“This may be a result of investors seeking safe haven and using stablecoins for non-trading related activities such as staking/DeFi.”
This was the case with other cryptocurrencies as well. Almost 73 percent of Bitcoins in existence were inactive since 2019. This sentiment suggests that these HODL-ers were waiting for an imminent bull run.
Additionally, the velocity of stablecoins had also recorded a dip. Stablecoins had reportedly witnessed a smooth movement throughout the first two months of the second quarter. However, post-mid-May, as the price of Bitcoin observed stability, the velocity of the stablecoins plummeted. This is also said to be a sign of the community HODL-ing instead of trading.
Tether Scores Big
Tether is the largest stablecoin in the crypto-verse. The coin even beat prominent cryptocurrency XRP and took its place as the third-largest crypto asset. The stablecoin’s market cap is so close to hitting $10 billion. At the time of writing, the market cap of USDT was $9.2 billion.
Furthermore, the report suggested that the circulation of the stablecoin had increased by 100 percent from 4.7 billion to 9.6 billion in the first half of 2020.