The popularity of stablecoins has been surging, with the market cap of all stablecoins combined skyrocketing from $6 billion at the beginning of March to roughly $17 billion currently. In fact, the stablecoin market cap has been rising by $100 million per day on average, literally meaning $100 million of additional stablecoins are being purchased and minted each day.
By far Tether (USDT) is leading the stablecoin surge, and it now has a market cap of over $14 billion, which actually makes it the #3 cryptocurrency on CoinMarketCap just behind Bitcoin (BTC) and Ethereum (ETH).
Aside from Tether (USDT), USD Coin (USDC), which is the stablecoin that is run by Coinbase, has surged to a market cap of $1.5 billion.
Originally the reason that stablecoins were becoming so popular is because they made crypto trading much more efficient. Essentially, stablecoins can be rapidly deposited, withdrawn, and sent between exchanges, unlike regular fiat which can take days to deposit and withdraw. Also, stablecoins don’t require a bank, whereas fiat requires a bank, which can lead to problems like money being reversed or seized.
Basically, stablecoins make crypto trading much more efficient and reduce risk.
However, now there’s another reason why stablecoins are in high demand. Stablecoins have become one of the most popular forms of crypto on Decentralized Finance (DeFi) platforms for providing liquidity, lending, and borrowing.
Essentially, since DeFi is skyrocketing, stablecoins are coming along for the ride since stablecoins are an essential currency for DeFi.
Zooming out, since the DeFi frenzy is pushing upwards at full steam, it seems likely that stablecoin popularity, and the stablecoin market cap, will continue to skyrocket as well.