While most cryptocurrencies are experiencing heavy losses, stablecoins keep the market afloat with their daily gains which, experts point out, have been accumulating since July.
In fact, CoinMetrics revealed that the stablecoin market capitalization has been increasing by up to $100 million every single day. Moreover, stablecoin frontrunner Tether (USDT) has surpassed Ripple (XRP) in market capitalization.
Stablecoin Market = DeFi Market?
Coin Metrics co-founder Nic Carter related the rapidly-growing stablecoin market cap to the boom in the DeFi sector as many protocols are sucking up stablecoins to stay ahead of what seems to be a liquidity competition.
— nic carter (@nic__carter) September 3, 2020
Over the last 12 months, the market capitalization of XRP has always been below $13.5 billion, and in mid-August, it rose to $14.5 billion. Meanwhile, USDT had a market capitalization of just $4 billion in 2019. At the end of June, it surpassed $10 billion, exceeding XRP for the first time, but over the following weeks, XRP recovered its third position.
However, as of August 31, the market capitalization of USDT rose to over $13 billion, and today it is 14.1 billion.
As the chart above shows, USDT remains as the only crypto asset in green, maintaining its market capitalization above $14.1 billion. The rest of the crypto heavyweights have been seeing a negative trend since September 5.
XRP Helping Stablecoin Growth
In mid-August, Ripple’s Senior Director of Global Operations Emi Yoshikawa mentioned that XRP is not competing with stablecoins or central bank digital currencies (CBDCs). Rather, XRP aims to contribute to the growth of CBDCs and stablecoins.
Many new stablecoins like DefiDollar (DUSD) have also entered the market. DUSD uses the primitives of DeFi to maintain its peg to one dollar. To protect against fluctuations in price, DUSD has a native staking pool which provides a volatility cushion.
Other popular stablecoins USDC Coin (USDC) and Dai (DAI) are on the tails of USDT. USDC has an overall valuation of around $1.7 billion today, while DAI holds the third position with over $420 million.