Stablecoins still play an essential role in the world of cryptocurrency. For example, many people believe these pegged assets are the sole reason why Bitcoin and other currencies note a price increase. But, interestingly, the overall transfer volume tells a different story, and the supply growth has slowed down significantly.
Stablecoin Transfer Volume Is Stagnating
While there is still over $86 billion worth of stablecoins on the market today, their active role in the crypto landscape has seemingly decreased. That is not too surprising, as there is only so much demand people can generate. However, that demand is now apparently dropping quickly, as is the overall transfer volume for currencies like USDT, USDC, and other assets.
It is safe to say the stablecoin transfer volume has peaked in May 2021. That month was phenomenal for stablecoin transactions, as all currencies combined generated over $802 billion in transfers. As astronomic amount, although it seems to be a one-off deal. Since May, the monthly transfer volume has not gone above $517 billion, and this month will be no different.
It is unclear why there was such a high volume in May or why the metric has decreased ever since. A new uptrend appeared to shape up during July, August, and September 2021. However, October is a relatively quiet month, as the current volume is $125 billion lower than September’s. Overcoming such a big gap will prove difficult, as bullish markets seemingly trigger no demand for stablecoins either.
The metrics confirm there isn’t always a correlation between stablecoin usage and overall price sentiment. Even with Bitcoin and all other significant assets going through a bullish spell earlier this week, the stablecoins are not seeing much attention. Moreover, considering there are over a dozen stablecoins on the market today, one would expect these metrics to look very different.
Weekly Supply Growth Hits 0.01%.a
Even though the existing stablecoin supply notes a low transfer volume, there is no real demand for new coins. A weekly supply growth of 0.01% represents $8.61 million being added across the many pegged currencies on the market. There used to be days when projects added that amount per day, and Tether has a history of issuing coins by the hundreds of millions.
It is difficult to determine what all of this means from a long-term perspective. Lower stablecoin growth and transfer volume indicate people are growing a bit tired of these pegged currencies. Surprising, the gap between USDT and USDC – for market share – is just 5.1%. BUSD and DAI are still holding strong. It appears LUSD and GUSD are the ones losing the race lately, although that momentum can still turn around.