Stablecoins are becoming ‘systemically important’ as market cap returns to record highs, analysts say

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With bitcoin becoming increasingly institutionalized, it may soon be stablecoins' time to shine.

With bitcoin becoming increasingly institutionalized, it may soon be stablecoins' time to shine. The market cap for stablecoins — cryptocurrencies that promise a fixed value peg to another asset — has recently reached all-time-high levels after a sharp drop in 2023. Domestic and cross border payments have driven it to $170 billion currently, from just $4 billion at the start of 2020. Monthly payments in stablecoins tripled to $1.4 trillion in the 12 months leading up to July.

Kevin Dede, an analyst at H.C. Wainwright, said a "once-sleepy world dominated by large banks could be in for a rude awakening," in a note earlier this week, due to stablecoins' potential to eliminate intermediaries and process transactions more transparently, efficiently and cheaply. By "increasing the velocity of money and making capital both more accessible and liquid, stablecoins should accelerate economic activity and enhance financial efficiency," Dede added.

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