September saw major developments in the cryptocurrency sector regarding stablecoins. According to researcher CCData, one notable pattern was the stablecoin's 18th consecutive month of falling market capitalization, culminating in a new low of $124 billion, evoking memories of September 2021. By August 2021, that is the lowest amount. In December, the sector was worth $137 billion.
The Federal Open Market Committee (FOMC) meeting and the FTX asset liquidation notification have caused periodic instability, but overall, the cryptocurrency market has shown strength by quickly recovering and stabilizing.
Stablecoins, also known as โpeggedโ or โpeggedโ cryptocurrencies, have their value set relative to that of a traditional currency, commodity, or financial instrument. The significant volatility of popular cryptocurrencies, such as Bitcoin (BTC), has made cryptocurrency investments less suitable for everyday transactions. Stablecoins seek to offer an alternative.
USDT and DAI post gains amid crypto market pressures
Two well-known stablecoin assets, Tether (USDT) and DAI, have shown modest gains despite the bearish trends that have affected the entire market. The market capitalization of the USDT stablecoin has increased by $334 million, indicating a monthly increase of 0.4%, while maintaining its dominant position with a 67.2% share.
The growing demand for Tether in cryptocurrency Exchanges are a factor contributing to its increase. According to research from earlier this week, there is now 24.7% USDT on exchanges, up from 17.6%.
Stablecoin trading volume on centralized exchanges, such as Coinbase Global Inc., decreased 28% to $331 billion in September. Since July 2020, this decrease marks the lowest monthly total.
Total crypto market cap at $1.07 trillion on the weekly chart: TradingView.com
Stablecoin: Thriving amid crypto market woes in 2022
The numerous scandals and bankruptcies of 2022 have contributed to a general trend of decreased activity in the bitcoin market, which includes this crash. The use of stablecoins to facilitate bitcoin trading and protect assets from market swings is common.
Stablecoins remain important in the cryptocurrency space and the global financial system, despite the declining trends in the market. In fact, the overall value of stablecoins has increased dramatically this year.
For example, more people turned to stablecoins as a safe haven from problems at traditional banks like Silicon Valley and Silvergate, further increasing the importance of the stablecoin market as a safe haven from problems at traditional financial institutions.
In short, September brought a number of changes to the bitcoin space. While most stablecoins did not do well, some, such as DAI and USDT, did well. Overall, the market remained stable and dealt with sporadic disruptions with relative ease.
Additionally, we witnessed the rise of Layer 2 solutions and account abstraction, which address the issue of scalability. Additionally, new companies are entering the scene that are changing the decentralized financial environment. As the market continues to evolve, cryptocurrency lovers and investors will no doubt follow these patterns closely.
Featured image from Liberty Street Economics
