The June 2023 Stablecoins & CBDCs Report, published by CCData recently, provides an overview of the state of the major fiat currency stablecoins and central bank digital currencies (CBDCs). The resultant picture is not very impressive.
The market for stablecoins
The steady fall in the stablecoins market has emerged as the first data point. In actuality, stablecoins’ overall market capitalization in June decreased by 0.57% to $128 billion (as of June 19). After a slump that lasted up to 15 months straight, the stablecoin market capitalization is at its lowest point since September 2021.
The dominance of stablecoins over the total market value of cryptocurrencies has increased to 11.8%, however the underlying issue is unrelated to stablecoins at this time.
In other words, stablecoins’ market value is just decreasing much less than the whole crypto market, which is pulling back from its November 2021 highs.
Despite this, USDT’s (Tether’s) market valuation has risen to a new record high, hitting at $83.5 billion in June.
However, despite USDT being one of the few stablecoins to climb, this was not enough to end the fifteen-month streak of falls in the total capitalization of all stablecoins. Additionally, USDT is only increasing marginally while other stablecoins are declining significantly.
Actually, USDT’s market share in stablecoins increased from 64.3% in May to 64.6% in June.
The trade volume statistic is a more telling statistic.
Stablecoin trading volume reached annual lows, according to CCData, and dropped by 10% in May to reach $414 billion. Since December 2022, this is the lowest monthly trading volume for controlled stablecoins.
At the same time, trade activity on centralized exchanges grew in June and clearly changed from stablecoins to genuine cryptocurrencies.
Not least of all due to the historically low level of fiat currency domination in the cryptocurrency markets.
Although trading volumes in fiat currencies are undoubtedly considerably bigger than they were in the beginning, a decreasing number of people are currently using fiat currencies to trade cryptocurrencies on a percentage basis.
When compared to stablecoin trading pairs, the market share of fiat currency trading pairs fell to 18.8% in June, in part because of a 33.9% decline in trading volumes of fiat currency pairings to $99.7 billion.
Stablecoins and CBDCs: A issue for banks
According to CCData, issues between cryptocurrency exchanges and their banking partners are the main cause of the fall in trading volume of fiat currency pairs in the cryptocurrency markets.
Therefore, the banks would be to blame for the decrease in the volume of trading in fiat currencies.
Furthermore, some of the issues stablecoins have been having for the past few months are also being caused by banks.
It is important to note that banks are not the only issue, and they likely aren’t even the biggest one. Nevertheless, it is odd that banks’ activities are hurting fiat currencies and stablecoins in the cryptocurrency markets and favoring actual cryptocurrencies.
CBDCs: the issue with banks and a comparison to stablecoins
Actually, despite the fact that CBDCs are also discussed in the study, not much is said about them. The discussion about stablecoins is unquestionably the most fascinating part.
Regarding CBDCs, it only states that progress continued in June, with Thailand and Japan adding their names to the list of nations that have begun testing their respective central bank digital currencies.
But according to the Bank of Thailand, there is currently no official plan to start their own CBDC.
Additionally, it reveals that Symfoni Solutions, a group that enables digital interactions between government services, has announced the launch of a bridge that will link the Norwegian CBDC, the Swedish CBDC, and the BROK government platform, which uses blockchain technology to manage and share data about the shares of unlisted companies.
An ERC20 token for the bridge is linked to NOK on Arbitrum.
As a result, it’s conceivable that at this point in the market, Bitcoin is receiving the most attention.
The spotlight has probably switched to genuine cryptocurrencies with the conclusion of the altseason, the decline in stablecoin market capitalization, and the decline in trading volumes in fiat currencies.
Almost none of the big crypto assets have been performing exceptionally well for a while now.
It is conceivable to suppose that there is a brief phase of attention moving from altcoins to Bitcoin because only Bitcoin has acquired momentum.
BTC’s market value has increased 10% over the past 30 days, outpacing the growth of all 20 other cryptocurrencies combined during the same time frame.
Contrarily, BNB is down 22% from a month ago, as are ADA, SOL, and MATIC.
Altcoins have faced a stagnation in momentum for several months due to the SEC’s intensified actions against unregistered securities within the crypto asset market.
On the other hand, since bitcoin is unmistakably a commodity, it is not in trouble.
Additionally, rather than being a purely speculative asset, Bitcoin now tends to be more of a medium- to long-term investment, which frequently makes it less appealing in the short term.
Because of this, it appears that the altseason, in which profitable short-term transactions were made possible by the high volatility of altcoins, has ended for the time being. Instead, we have entered a period in which many people choose to concentrate on the medium to long term and on Bitcoin.
It is not necessary for this phase to persist a long time, though.