Stablecoin Dominance Retreats From November Record High

Stablecoins make up more of the crypto market than ever before, as the winter stretches into its second year


FOTOGRIN/ modified by Blockworks


Stablecoin dominance is retracing slightly after reaching record highs as FTX went bust last month.

A collection of more than 30 value-pegged tokens, led by Tether’s USDT and Circle’s USDC, were altogether worth $137.5 billion on Nov. 11, per data from The Tie, representing nearly 19% of the entire cryptocurrency market (known colloquially as their dominance).

FTX filed for bankruptcy alongside more than 100 affiliates on the same day, which broke stablecoins’ previous record of 18.4% set in mid-June. Markets had reeled from the dramatic flop that was algo-stablecoin Terra in May. By July, the price of bitcoin had halved.

Stablecoin dominance went from nearly 11% to 17.5% across the same period, a jump of 59 percentage points. All while $900 billion was wiped from crypto’s collective market cap, another 50% cut.

Thick contagion choked crypto lenders Celsius and Voyager to the point of bankruptcy weeks later. In November, it was FTX sending markets into a tizzy. 

Stablecoins made up 13.8% of crypto on Nov. 5, the day before Binance CEO Changpeng Zhao’s stark warning about FTX. Five days later, that figure had jumped to 18.6% — a 34 percentage point boost.

Increased stablecoin dominance is just a bear market thing. The value of non-stablecoin assets drops significantly, often less so than total stablecoin supplies. 

This is a repeating pattern. Charting stablecoin dominance against crypto’s total market value over the past five years shows they’re inversely correlated. 

Pegged assets were less than 5% of crypto as markets peaked last November, and less than 1% when bitcoin first hit $20,000 in late 2017, at a time when USDC’s first minting was 10 months away and MakerDAO’s DAI stablecoin has just launched. On the other hand, bitcoin dominance — currently at 42% — sat between 40% and 63% at those peaks.

With $66 billion and $44 billion in supply, USDT and USDC seem solid in third and fourth place on market cap leaderboards. That’s behind bitcoin and ether, together worth $470 billion. 

Binance’s branded offering is the third-largest stablecoin, representing 2.2% of crypto caps. More decentralized offerings DAI and FRAX are still runners-up; both maintain less than 1% dominance right now. 

Bitcoin prices are now consolidating around $16,000 with low volatility. If markets break downwards, we could see stablecoins actually reach the big 2-0 (percent).

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