Bull market growth, bear market stability, the market capitalization of the top four stablecoins surpasses Ethereum for the first time

Stablecoins have benefited from the bull market growth in 2021, able to hold steady performance during this year's bear market, briefly surpassing Ethereum in total market value for the first time in history. Despite USDT losing market share due to the rise of USDC, the former still appears to enjoy more user support.

Stablecoin Market Cap Surpasses Ethereum Temporarily

In a recent report by blockchain analytics firm Glassnode and data platform CoinMarketCap CMC, it was mentioned that during the deleveraging process in the bear market, stablecoins have become the preferred asset as investors seek low volatility assets.

Over the past two years, the total market capitalization of the top four stablecoins - USDT, USDC, BUSD, and DAI - accounted for only 50% of Ethereum's market cap at most. However, as the market declined, the total market capitalization of the top four stablecoins surpassed Ethereum for the first time in June and July.

This indicates the significant dominance of stablecoins in the crypto space. In short, their market cap saw a significant increase during the bull market of 2021 and managed to hold steady during the bear market, temporarily surpassing Ethereum's market cap.

Note: The current total market capitalization of the top four stablecoins is approximately 67% of Ethereum's.

Competition Among Stablecoin Leaders

Two years ago, USDT accounted for 88.3% of the total stablecoin market capitalization, but since then, its dominant position has been on a macroscopic downward trend, now only holding 45.2%. Market preferences seem to be undergoing structural changes:

• Since May 11, USDT's supply has decreased by $17.24 billion.
• USDC has grown by $7.3 billion during the same period.
• BUSD has increased by $700 million.
• DAI has decreased by $1.6 billion.

Despite the growing popularity of USDC, a poll conducted by CMC on Twitter regarding "Who Will Lead the Stablecoin Market in the Second Half of the Year" shows that USDT still has the most user support.

Note: Limited sample size for reference only. Arcane Research previously predicted that USDC would surpass USDT in October.

BIS: Cryptocurrency Market Still Relies on Fiat

At the end of June, the Bank for International Settlements (BIS) released a report stating that despite the crypto sector's calls for decentralization and going bankless, the prevalence of stablecoins indicates that the crypto market generally still relies on the trust conferred by central bank currencies.

Only central banks can provide the nominal anchor that cryptocurrency desires, meaning anchoring exchange rates. While the crypto community initially resisted relying on central bank currencies, they quickly realized the need for central bank currency as a unit of account. Stablecoins are also widely used as a medium of exchange in most cryptocurrency transactions.