From Trading to Value Storage

• The stablecoin role has shifted from trading to being used for value storage and remittance, showing a major trend change.
• Tether and USDC inflows reveal growing adoption and stablecoins’ role as buy-side liquidity in the crypto market.

The stablecoin market was worth $30 billion in September 2021, but it has since grown to almost $166 billion. This large rise shows a developing trend whereby stablecoins are being welcomed for several uses. But just 21% of these stablecoins are used for transactions on exchanges right now.

This is a far different picture from 2021, when over half of the stablecoins were traded through exchanges. This change in the way stablecoins are included in financial strategies shows that they are progressively being employed as a store of value or a remittance mechanism.

Stablecoins Aren’t Just for Trading Anymore

CryptoQuant’s Ki Young Ju is throwing down some exciting stats: stablecoins are no longer just sidekicks for crypto trades.

Right now, only 21% of stablecoins are sitting on exchanges (a huge drop from over 50% in 2021), and yet the… pic.twitter.com/hG30vrJIJ9

— Mario Nawfal’s Roundtable (@RoundtableSpace) November 3, 2024

Stablecoin Inflows and Market Shifts Highlight Evolving Trends 

The founder of CryptoQuant, Ki Young Ju, has identified a number of events highlighting this change. During the second week of July 2024, he observed an all-time high in stablecoin inflows into the market. Out of all the stablecoins, Tether (USDT) has the most market share and accounts for a significant 75% of these inflows.

Stablecoins are especially important in the whole crypto ecosystem since historically rises in Tether’s market capitalization have often followed notable price swings in Bitcoin.

In June 2024, USD Coin (USDC) deposits on exchanges peaked in a year at $228 million. This increase pointed to traders using dropping prices to purchase crypto assets, therefore highlighting the changing application of stablecoins.

Stablecoin market cap kept rising, and ratios roughly matched past maxima in relation to the market cap of Bitcoin. This emphasizes their importance in enabling trading activity during market changes since stablecoins seem to be buy-side liquidity.

These patterns highlight how stablecoins now serve purposes outside of simple trading on exchanges. They now are vital instruments for maintaining value, moving money internationally, and giving investments liquidity.

Furthermore, noted by CNF is how stablecoins are disrupting the global financial system and impacting remittances, peer-to-peer payments, and currency trading. Now peer-to-peer volume utilizing Tether (USDT) has exceeded levels in America across Europe, the Middle East, and Africa (EMEA).