November Sets Yearly High for Stablecoin Trading with 77% Surge

Stablecoins are steadily gaining traction as a crucial component of the digital asset ecosystem, showcasing significant growth in trading volumes and market capitalization. However, their broader adoption, particularly in global e-commerce, remains limited due to regulatory uncertainties and an over-reliance on USD-pegged assets. Recent reports highlight both the promise and challenges of stablecoins, emphasizing their transformative potential in digital payments while shedding light on the barriers preventing their widespread use in traditional commerce and international transactions.

November Stablecoin Trading Surges Amid Growing Institutional Confidence in Digital Assets

November witnessed a remarkable resurgence in the stablecoin market, fueled by increasing institutional confidence and a broader positive sentiment in the digital assets sector. According to a report released by CCData on Nov. 27, trading volume for stablecoins skyrocketed by 77.5%, reaching an impressive $1.81 trillion as of Nov. 25. This puts monthly trading activity on centralized exchanges on track to achieve its highest level of 2024.

In a continuation of a 14-month growth streak, the total stablecoin market capitalization rose by 9.94% in November, climbing to $190 billion. This milestone surpasses the previous all-time high of $188 billion recorded in April 2022, just before the collapse of TerraUSD (UST), an algorithmic stablecoin that sent shockwaves through the market. Despite this significant recovery, the market dominance of stablecoins slipped to 5.54% from 7.22% in October following a shift in investor focus toward Bitcoin and altcoins.

Tether’s USDt remains the leader in the stablecoin market, strengthening its position with a 10.5% growth in market capitalization to $133 billion. This places USDt as the dominant player, accounting for 69.9% of the total stablecoin market. Circle’s USD Coin (USDC) also posted impressive gains, expanding its market capitalization by 12.1% to reach $38.9 billion, which is its highest level since February 2023.

Ethena Labs’ USDe stablecoin emerged as one of the standout performers in November, with its market capitalization soaring by 42.2% to $3.86 billion. The surge in demand for USDe is largely attributed to heightened interest in the Ethena ecosystem, following a proposal to activate revenue sharing for Ethena (ENA) token holders. Since its launch in February 2024, USDe has maintained strong appeal, although its annual percentage yield (APY) has declined from a high of 55.9% in March to 21.2% in November, according to CCData.

While some stablecoins recorded significant growth, others faced declines. First Digital USD (FDUSD) and Sky Dollar (USDS)—formerly Dai (DAI)—experienced notable contractions in market capitalization. FDUSD saw a 14.9% drop to $1.90 billion, while USDS fell by 8.34% to $950 million. 

Diversification Beyond Stablecoins

The report also notes a broader trend of diversification in the cryptocurrency market. While stablecoins remain a crucial component of the digital asset landscape, investors have increasingly allocated capital to Bitcoin (BTC) and other altcoins. This trend has contributed to the decline in stablecoin market dominance despite the overall growth in capitalization.

The sharp rise in stablecoin trading volume and market capitalization comes amid a growing institutional reliance on these digital assets as a stable medium for transactions, trading, and risk management. Tether and Circle’s continued dominance reflects their ability to maintain trust and utility in a rapidly evolving market, while the rise of new entrants like USDe showcases the potential for innovation and ecosystem-driven growth in the sector.

As the cryptocurrency market enters 2025, stablecoins are poised to remain a pivotal element of the industry, bridging the gap between traditional finance and decentralized systems. However, the challenges faced by some stablecoins indicate that maintaining competitive advantages and user trust will be critical for sustained success.

Stablecoins’ Potential in E-Commerce Hindered by Limited Adoption and Non-USD Scarcity

Stablecoins, known for their cost efficiency, transparency, and speed, are making waves in the cryptocurrency space but still account for a minuscule share of global online commerce transactions. A joint report by strategy consultancy Quinlan & Associates and blockchain developer IDA, published on Nov. 27, places the spotlight on the challenges and untapped potential of stablecoins in e-commerce and beyond.

Cryptocurrencies, including stablecoins, represent just 0.2% of the global e-commerce transaction value, the report reveals. While their programmability and efficiency make them an attractive alternative to traditional payment systems, stablecoin adoption remains largely confined to the Web3 ecosystem.

“Paired with blockchain-enabled favourable features such as programmability, stablecoins can offer cost efficiency, enhanced transparency, 24/7 availability, and faster processing that traditional financial systems simply can’t match,” Lawrence Chu, IDA’s co-founder and CEO, said in a statement.

The report identifies regulatory uncertainty as the leading hurdle to stablecoin adoption. Approximately 81% of merchants cited regulatory ambiguity as the primary reason for hesitating to accept digital assets as a mainstream payment option.

Moreover, the scarcity of stablecoins pegged to currencies other than the United States dollar poses a significant challenge. While the USD dominates international finance, it is not the official or secondary currency in 83% of countries worldwide. Additionally, roughly 40% of global international payments are conducted in non-USD currencies, creating a pressing need for stablecoins tied to other currencies.

Stablecoins collectively account for $200 billion in market capitalization, nearly all of which is concentrated in USD-pegged assets, according to CoinMarketCap. Tether’s USDt (USDT) and USD Coin (USDC) dominate the space with market caps of $130 billion and $40 billion, respectively.

The over-reliance on USD-pegged stablecoins not only limits the potential for international adoption but also raises questions about economic sovereignty for countries outside the dollar system.

In response to the lack of non-USD stablecoins, IDA announced plans to launch a stablecoin pegged to the Hong Kong dollar. This new digital asset aims to facilitate payments between Hong Kong and global markets, offering a potential model for other non-USD stablecoins.

Stablecoins have also become a significant player in the financial ecosystem, particularly through their backing with short-term US government securities like Treasury bills. Minutes from a US Department of Treasury meeting, released on Oct. 29, noted that stablecoin growth has modestly increased demand for short-dated Treasury securities.

Regulatory Progress on the Horizon

Former US Senator Pat Toomey said on Nov. 20 that lawmakers are likely to prioritize stablecoin regulation starting in 2025. Key questions surrounding reserve requirements, insurance on bank deposits, and the jurisdiction of regulatory bodies remain unresolved.

The upcoming congressional term will also consider pivotal legislation, such as Senator Bill Hagerty’s Clarity for Payment Stablecoins Act, which seeks to provide a clear framework for stablecoin issuers and users.

While stablecoins have made significant strides, their role in global e-commerce and financial systems is still nascent. Addressing regulatory uncertainties and diversifying the currency base of stablecoins are critical steps for unlocking their full potential.

As new stablecoin projects like the Hong Kong dollar-pegged asset emerge and regulatory clarity improves, stablecoins could move beyond their Web3 niche and become a transformative force in the global financial landscape.