As Bitcoin becomes more institutionalized, the time for stablecoins to shine may be near. The market capitalization of stablecoins (virtual currencies that promise to be locked into another asset at a fixed price) recently reached an all-time high after plummeting in 2023. Domestic and cross-border payments now amount to $170 billion, up from just $4 billion. Monthly stablecoin payments tripled to $1.4 trillion in the 12 months to July. “Stablecoins are becoming systemically important,” Bernstein analyst Gautam Chughani said in a note on Thursday, adding that stablecoins “are now a major player in U.S. Treasuries, alongside large sovereign holders.” He is now the 18th holder.” This could impact investments in the future, he added, as Robinhood “continues to integrate stablecoins into its crypto trading and cross-border remittances.” Bernstein has an outperform rating and a $30 price target. Stablecoins (Tether and Circle’s USDC dominate the market) are primarily used for trading on centralized and decentralized exchanges and as collateral in decentralized finance (DeFi). Cryptocurrency investors closely monitor stablecoins for evidence of demand, liquidity, and market activity. Recent reports show that stablecoins are also becoming popular for uses other than trading, including saving funds overseas in USD, getting better currency exchange rates, earning yield, and sending money internationally. It will be. HC Wainwright analyst Kevin Dede wrote in a note earlier this week that stablecoins have the potential to cut out intermediaries and allow for more transparent transaction processing, making it possible for “big banks to control A world that was once asleep could be in for a rude awakening.” Efficiently and cheaply. Dede added: “By increasing the velocity of money and making capital more accessible and liquid, stablecoins should accelerate economic activity and increase financial efficiency.” JPMorgan, Goldman Sachs, and Wells Fargo are all considering developing stablecoins. PayPal launched its own dollar-backed stablecoin last year, while Visa supports stablecoin payments and Mastercard supports stablecoin wallets and other crypto card programs. At an event last week to celebrate Circle’s move from Boston to New York City, BlackRock Chief Operating Officer Rob Goldstein said, “Our vision is for USDC to become a financial center through our New York office.” . “Major financial institutions are increasingly looking at stablecoins, and there is hope that regulatory clarity will catch up,” Dede said. “Financial services companies operate on razor-thin profit margins, and we believe that stablecoins are on the precipice of much greater adoption outside of the crypto world replacing legacy technologies in traditional finance. is watching.” — CNBC’s Michael Bloom contributed reporting.
