The total supply of stablecoins has seen a dramatic decrease since the UST collapse in May 2023. Last month alone saw a $1.7 billion outflow, leaving the total supply 33% below its peak.
Tether’s market share has increased, while all other coins have experienced large drawdowns. Liquidity and volume in the space are at an all-time low and still falling.
The tightening of financial conditions across the economy and the various scandals within the crypto space have led to a lack of interest in stablecoins and crypto in general.
The market share of Tether has been boosted by the demise of UST, the regulatory shutdown of BUSD in February and the concerns surrounding USDC in March. It currently boasts a market share of 67%.
The US Federal Reserve’s plan to raise rates has made it difficult for capital to enter crypto, as US government-guaranteed bonds offer more than 5%.
However, the market is predicting that the Fed will soon call a stop to their rate hikes, which could open up the space to more liquidity and investment.
The stablecoin market provides a useful insight into the performance of the crypto space over the past few years. With liquidity and volume at an all-time low, it’s clear that the industry has been heavily damaged in recent years.