According to recent data from Glassnode, an on-chain analytics firm, the volume of stablecoins held on centralized exchanges has hit low volumes. Reportedly, the volume has been estimated to be below $20 billion, the lowest since April 2021.
As shown in the chart below, the stablecoin balance across exchanges peaked in December last year, following the collapse of the crypto exchange FTX. The value on the exchanges at that time was recorded to be over $44 billion.
However, following the phase, the values continued to decline. The trail continued since the beginning of the year as the industry faced a series of troubles including increased regulatory scrutiny and the collapse of crypto-friendly banks in the US. The stablecoins in the metrics include the following: BUSD, GUSD, HSUD, DAI, USDP, EURS, SAI, sUSD, USDT, and USDC.
Analysts suggest that the exchange’s stablecoin value decline can likely be related to the increased regulatory risks associated with the crypto industry. As evident in recent times, financial regulators have increased their scrutiny of the space following the collapse of Terra’s algorithmic stablecoin and the subsequent implosion of several crypto-related firms that happened last year.
Notably, the decline in stablecoin balances also indicates a minimal inflow of liquidity into the crypto ecosystem this year despite the market recovery from the prolonged bear phase that was sustained through the majority of the year. Additionally, USDT and USDC’s exchange liquidity is now at a low not seen since early 2022.
Simultaneously, analysts suggested that since the beginning of this year, while the crypto economy has surged by 41.77%, reaching a current market capitalization of $1.17 trillion, the stablecoin economy experienced a substantial loss of $7.3 billion within a span of 140 days.
According to data, the stablecoin economy has witnessed a $7.3 billion decline in value this year and recently, it has dwindled to $130.79 billion. Among the stablecoins that have experienced substantial redemptions in the past four months, USDC alone shed over $14 billion.
Similarly, BUSD has experienced redemptions exceeding $11 billion since the first week of January, while DAI faced redemptions amounting to $361 million. Following is the table of the top eight stablecoins by market capitalization as of May 21, 2013.
Notably, while USDC and BUSD experienced redemptions exceeding $7.3 billion this year, a few other stablecoin projects have managed to counterbalance these losses with growth for instance TUSD. TUSD started the year with a market capitalization of $846.57 million and as of this week, has touched a market valuation of $2.04 billion, indicating a growth rate of 140.97%.
Similarly, USDT witnessed a substantial increase in its market cap as it stood at $66.29 billion at the start of the year, but has since surged by over 25%, reaching $82.95 billion. However, then the token witnessed a fall and as of May 21, 2023, the volume of the token market has dropped considerably, settling at a comparatively modest $10.77 billion.
Although the current volume may appear smaller, it still accounts for a significant share of the total portion. Reportedly, the $10.77 billion worth of stablecoin trades accounts for 57.9% of the total 24-hour trading volume within the entire crypto economy.
