In May 2024, the stablecoin ecosystem rebounded, achieving a market capitalization of $161 billion, marking a 0.63% increase from the months outset.

According to CCData, this marks the highest level since April 2022, following eight months of steady growth.

Tether Dominates as Stablecoin Market Rebounds

While the stablecoin market has been surging, its dominance slightly dropped from 7% in March to 6.07% this month. The fall was due to crypto assets recovering in price after the unexpected spot Ethereum ETF approval in the United States.

In addition, on May 23, the stablecoin trading volumes on centralized exchanges (CEXs) were at a low of $829 billion. The report noted that after the April Bitcoin halving event, CEXs’ trading activity, in general, has been historically low.

The largest of the cohort Tether (USDT), achieved a record market cap of $111 billion as of May 29, boosting its dominance in the stablecoin industry to 69.3%.

Among the top ten stablecoins, Athena USDes market cap increased for the fifth month, growing by 11.6% to $2.61 billion. CCData attributes this rise to its expanded use as collateral for perpetual trading on Bybit.

BlackRock’s tokenized fund, BUIDL, surged 19.6% to $448 million, making it the largest treasury fund and surpassing Franklin Templeton’s BENJI. Notably, BUIDL represents a share in BlackRock’s USD Institutional Digital Liquidity Fund.

The report also highlights Circle’s USDC market capitalization increase for the sixth consecutive month, reaching $32.6 billion in May. This rise coincides with increased demand, as USDC pairs recorded an all-time high monthly trading volume in March. USDCs market share by trading volume increased for the second month to 8.27%.

In addition, Circles stablecoin has benefited from heightened on-chain trading activity on networks like Base and Solana. The percentage of USDC supply on these chains rose to 9.29% on Base and 7.78% on Solana.

Stablecoin Market’s Recovery Amid Regulation Uncertainty

The report highlights the stablecoin market recovery following losses due to the collapse of the Terra Luna ecosystem and the de-pegging of algorithmic stablecoin TerraClassicUSD (USTC), initiating a seventeen-month downtrend.

In addition, it notes recent developments regarding the potential delisting of USDT pairs from platforms like Kraken due to upcoming MiCA regulations. While concerns arose about MiCA compliance, Kraken clarified that there were no immediate plans to delist USDT.

However, European exchanges like OKX announced intentions to phase out USDT pairs in response to MiCA regulations, including transaction limits under €200 million.

As for Central Bank Digital Currencies (CBDCs), the report stated that while the US House passed a bill prohibiting the Federal Reserve from issuing CBDCs, Brazils DREX digital currency pilot program was postponed to 2025 due to privacy concerns. Also, Nigerias adoption of e-Naira CBDC remains lackluster, with only marginal transaction increases since its October 2021 launch.