Significant events in the cryptocurrency sector occurred in September with regard to stablecoins. According to researcher CCData, one notable pattern was the stablecoin market capitalization’s 18th consecutive month of decline, which culminated in a new low of $124 billion, evoking memories of September 2021. For August 2021, that is the lowest amount. In December, the sector was worth $137 billion.
The Federal Open Market Committee (FOMC) meeting and the notification of the FTX asset liquidation have caused periodic instability, but overall, the cryptocurrency market has shown strength by rebounding swiftly and stabilizing.
Stablecoins, also known as “pegged” or “linked” cryptocurrencies, have their value set in relation to that of a traditional currency, commodity, or financial instrument. The significant volatility of the most well-known cryptocurrencies, such as Bitcoin (BTC), has rendered cryptocurrency investments less appropriate for everyday transactions. Stablecoins seek to offer an alternative.
USDT And DAI Record Gains Amid Crypto Market Pressures
Two well-known stablecoin assets, Tether (USDT) and DAI, have shown modest gains despite the downtrends that have engulfed the entire market. The market capitalization of the USDT stablecoin has increased by $334 million, indicating a 0.4% monthly rise, while maintaining its dominant position with a 67.2% lion’s share.
The growing demand for Tether on cryptocurrency exchanges is one factor contributing to its increase. According to an investigation earlier this week, there is now 24.7% of USDT on exchanges, up from 17.6%.
Stablecoin trading volume on centralized exchanges, such as Coinbase Global Inc., decreased by 28% to $331 billion in September. Since July 2020, this decrease signifies the lowest monthly total.
Total crypto market cap at $1.07 trillion on the weekly chart: TradingView.com
Stablecoin: Thriving Amid Crypto Market Woes in 2022
The numerous scandals and bankruptcies in 2022 have contributed to a general trend of decreased activity in the bitcoin market, which includes this decline. The use of stablecoins to ease bitcoin trading and shield assets from market swings is common.
Stablecoins are still important in the realm of cryptocurrencies and the global financial system, despite decreasing tendencies in the market. Actually, the overall value of stablecoins has increased dramatically this year.
For example, more people resorted to stablecoins as a safe haven from troubles in traditional banks like Silicon Valley and Silvergate, which further increased the significance of the stablecoin market as a haven from issues in traditional financial institutions.
In summary, September brought about a number of changes in the bitcoin space. While most stablecoins did not do well, some, like DAI and USDT, did. Overall, the market held steady and dealt with sporadic interruptions with relative ease.
Additionally, we witnessed the rise of Layer-2 solutions and account abstraction, which tackle the scalability issue. In addition, new ventures are joining the scene, changing the decentralised finance environment. As the market continues to evolve, cryptocurrency lovers and investors will undoubtedly be keenly monitoring these patterns.
Featured image from Liberty Street Economics