The stablecoin market capitalization reached a record high following a period of consistent growth since mid-2023, according to data from Alphractal.
The data analysis platform reported on Jan. 31 that the stablecoin market cap rose 73% from $121.18 billion in August 2023 to reach an all-time high of $211 billion, while USDC (USDC) has been gaining an edge over other stablecoins.
Stablecoin market capitalization. Source: Alphractal
Analyzing the market capitalization of other stablecoins, excluding Tether’s USDT (USDT) and USDC, the data reveals relatively average growth since 2024. This suggests that USDT and USDC remain the two most preferred stablecoins in the crypto market.
“The rest of the market has not grown significantly since 2023, maintaining stable average values.”
Stablecoins market cap, excluding USDT and USDC. Source: Alphractal
USDT, the largest stablecoin by market cap, recorded an all-time high market cap of $140 billion in December 2023. Its market cap is now at $139.4 billion on Jan. 31, with a market dominance of 63.84%.
USDC gains momentum
USDC’s market capitalization has been in an uptrend since November 2023.
Additional data from CoinMarketCap shows that USDC’s market capitalization has increased by over 120% from a low of $24.1 billion on Nov. 14, 2023, to $53.4 billion at the time of writing.
USDC market capitalization. Source: CoinMarketCap
This increase aligns with a rise in demand, with USDC pairs recording an all-time high daily trading volume of $20 billion on Jan. 18. As a result, USDC’s market share by market capitalization has risen significantly to 24.6% on Jan. 31.
An earlier report by Cointelegraph showed a 78% year-over-year growth in USDC circulation, outpacing the growth rate of all global stablecoins. As of Jan. 31, USDC’s circulating supply is at $53.4 billion, more than double the 2023 low of less than $24 billion, according to CoinMarketCap.
Alphractal said that USDC has benefitted from the recent drop in altcoins, with investors converting a large portion of their crypto holdings into USDC.
The USDC market spike in 2024 followed a massive drop in 2023 when the stablecoin’s market value shrank as much as 45% following Silicon Valley Bank’s (SVB) failure.
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Is the crypto cycle top in?
USDC’s dominance is around the same level it was at the end of the 2021 bull cycle. This was the beginning of the 2022 bear market that saw Bitcoin’s (BTC) price drop as low as $15,500 in Nov. 2022.
Alphractal explained:
“If this metric continues to rise, it could be a bearish signal for the crypto market, indicating increased risk aversion. On the other hand, if it declines, it could pave the way for new market highs.”
USDC market dominance. Source: Alphractal
During the last bull market cycle, USDC supply began rising in May and peaked in March 2022, approximately four months after asset prices peaked.
The total stablecoin market cap grew by 177% between April 2021, peaking at $167.5 billion in March 2022.
If the current stablecoin market supply continues growing and crypto prices begin to decline, the market may reach its peak over the next few months.
On the contrary, a rising stablecoin market cap is usually associated with growing investor conviction, signaling the potential for boosted capital inflows. This suggests that the bullish momentum could continue for a few more months.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.