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/Shutterstock.com 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).
Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.
Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.
