Where are all the stablecoins?

The role of stablecoins in the crypto ecosystem cannot be overstated. They serve as a bridge between the traditional financial system and the digital asset world, offering traders and investors a stable medium of exchange. This stability is essential for providing liquidity, as stablecoins can be quickly converted into other cryptocurrencies or fiat money without substantial loss of value. This liquidity facilitates trading by allowing market participants to move in and out of positions with minimal slippage. Additionally, stablecoins help maintain market stability by acting as a buffer against the volatility of other cryptocurrencies. For example, during market downturns, investors often convert their assets into stablecoins to preserve value, thereby preventing further market declines.

This resilience became evident during this weekend’s market downturn, which saw Bitcoin drop below $50,000 and VIX climb to its four-year high. The decline, led by weak employment data from the US and a rate hike from the BoJ, affected almost all asset classes, including stocks, indexes, and commodities. Stablecoins, on the other hand, remained unaffected.

The total stablecoin market cap remained unaffected during the weekend and into Monday, enabling continued trading activity for the volatile market. This stability is a testament to their design’s effectiveness and importance in maintaining market confidence during periods of uncertainty.

In this report, CryptoSlate will examine stablecoin distribution across various metrics to determine where the $164 billion market cap is located. By examining the market cap, distribution across blockchains, presence in smart contracts, and supply on exchanges, we can better understand how the market works and what makes it tick.