Brutal Month For Stablecoins Results In Some Surprising Winners

During times of extreme market volatility, investors and speculators will often explore more stable market opportunities. In cryptocurrency, that would-  by definition – mean exploring stablecoins. Interestingly, several pegged assets note a strong market cap increase in the past month as the USDT dominance drops below 44%. 

Several Stablecoins Note Growth In The Bear Market

While the overarching market trend has relentlessly pushed down all major crypto assets, it hasn’t necessarily driven more people to explore stablecoins. One would expect broader interest in scooping up BTC and ETH so far from their all-time highs, yet it appears speculators aren’t going through stablecoins to do so. Although several pegged assets have a more than healthy market cap increase this month, the top stablecoins have not budged much. 

Today, the combined stablecoin market cap represents just over $153 billion. That is an acceptable number, although it still represented a steep decline from over $188 billion a few weeks ago. However, the market capitalization is still on the decline, even though most crypto assets note some degree of stability for now. There is plenty of uncertainty plaguing the crypto industry today, and confidence in stablecoins has waned following the recent UST debacle. 

That said, there have been healthy gains for USDD (+40.28%), FlexUSD (+15.02%), mStablecoin USD (+9.28%) and USD Coin (+3.13%). It is remarkable to see USDC as the only top-tier stablecoin noting a market cap increase. It has yet to surpass Tether’s USDT as the top pegged asset, although the market cap between the two continues to shrink. That doesn’t mean there is less confidence in USDT, but it is good to see competition emerge. 

The past month has also yielded market cap gains for DAI (+2.58%), Frax (+1.07%), and TrueUSD (+0.42%). It will be interesting to see if USDD can sustain this run and surpass a $1 billion market cap in the next few weeks. FlexUSD and mStableUSD are further removed from that goal, with the first nearing $193 million and the latter still below $52 million. Diversification is healthy, though, even where stablecoins are concerned. 

The Fallen Stablecoin Brethren

While the currencies above are all in a relatively good place, the opposite side of the spectrum looks far less promising. Besides UST, four other stablecoins are noting their market cap dropped by 50% or more this month. They include Liquity USD (-50.02%), YUSD Stablecoin (-57.79%), Dola (-60.23%), MAI (-79.68%), and Magic Internet Money (-89.32%).

Evidently, the stablecoin industry is still reeling from the UST debacle, resulting in the third-largest pegged asset becoming worthless and defunct in a matter of days. Overall confidence in algorithmic pegged currencies has never been lower, and it seems unlikely things will improve on that front. Although some currencies in the list above are unknown and largely irrelevant to traders, the overall trend isn’t too promising.

Following the demise of UST, it remains unclear which stablecoin will join Tether, USD Coin, and BUSD at the top of the pyramid. DAI has a firm grip on the #4 spot, primarily due to Frax and TUSD being roughly $5 billion behind. An interesting industry aspect to keep tabs on over the coming weeks and months. 

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