CCData recently released the June 2023 Stablecoins & CBDCs Report, a state of affairs of major fiat currency stablecoins and central bank digital currencies (CBDCs).
The picture that emerges is not particularly good.
The stablecoin market
The first data point to emerge is the continued decline in the stablecoin market.
In fact, in June the total market capitalization of stablecoins fell by 0.57%, to $128 billion (on 19 June). This is the lowest stablecoin market capitalization since September 2021, after as many as 15 consecutive months of decline.
However at the same time the dominance of stablecoins over the overall crypto market capitalization has risen to 11.8%, so the underlying problem is not related to stablecoins.
In other words, it is the crypto market as a whole that is retreating from the highs of November 2021, with the market capitalization of stablecoins simply declining much less.
Despite this, the market capitalization of USDT (Tether) has reached a new all-time high, peaking at $83.5 billion in June.
But this was not enough to break the fifteen-month streak of declines in the overall capitalization of all stablecoins, because USDT is among the few to rise. What’s more, USDT is only going up a little, while other stablecoins are going down a lot.
In fact, USDT’s dominance in the stablecoin market rose from 64.3% in May to 64.6% in June.
A more indicative figure, is that which concerns trading volumes.
CCData reveals that exchange volume in stablecoin fell to annual lows, with a 10% drop in May bringing it to $414 billion. This is the lowest monthly trading volume for centralized stablecoins since December 2022.
At the same time, centralized exchanges saw increased trading activity in June, which evidently shifted from stablecoins to actual cryptocurrencies.
Not least because the dominance of fiat currencies has reached an all-time low in crypto markets.
Obviously, trading volumes in fiat currencies are much higher than in the early days, but as a percentage, fewer and fewer people now use fiat currencies to trade cryptocurrencies.
The market share of fiat currency trading pairs in the crypto markets in June dropped to 18.8%, compared to that of stablecoin trading pairs, partly due to a 33.9% drop in trading volumes of fiat currency pairs to $99.7 billion.
CBDCs and stablecoins: the problem of banks
This decline in trading volume of fiat currency pairs, in the crypto markets, according to CCData would be due in particular to problems of crypto exchanges with their banking partners.
Thus, it would be the banks themselves that would be responsible for the decline in fiat currency trading volume.
Moreover, banks are also behind some of the problems stablecoins have been facing for the past several months.
It is worth noting that banks are not the only problem, and probably not even the main one, but it is curious that their actions are hurting precisely fiat currencies and stablecoins in the crypto markets, in favor of real cryptocurrencies.
CBDCs: the comparison with stablecoins and the problem of banks
Truth be told, although the report also covers CBDCs, it does not say much about them. Certainly by far the most interesting part is about stablecoins.
On CBDCs it merely says that developments around the world continued in June, with Japan and Thailand joining the list of countries that have started pilot programs for their respective central bank digital currencies.
However, the Bank of Thailand itself stated that as of today there is no official plan to launch their own CBDC.
It also reveals that the team that facilitates digital interactions between government services, Symfoni Solutions, has announced the launch of a bridge that will connect the Norwegian CBDC, with the Swedish CBDC, and with the BROK government platform that uses blockchain technology to manage and share information about the shares of unlisted companies.
The bridge has an ERC20 token pegged to NOK on Arbitrum.
As such, it is possible that the greatest attention is shifting to Bitcoin at this stage of the market.
With the end of the altseason, the reduction in the market capitalization of stablecoins, and that of fiat currency trading volumes, attention has most likely shifted to actual cryptocurrencies.
For some time now, almost none of the major crypto assets have been performing particularly well.
Only Bitcoin has gained momentum, so much so that it is possible to imagine that there is a momentary phase of shifting attention from altcoins to Bitcoin.
Compared to 30 days ago, BTC’s market value has grown 10%, which is more than the growth over the same period of all 20 major cryptocurrencies.
On the contrary, BNB is -22% from a month ago, ADA -20%, SOL -15%, and MATIC -24%.
The problem is that for months now, the momentum of many altcoins has run out, partly because of the SEC’s attack on those crypto assets that are considered unregistered securities.
Bitcoin, on the other hand, is clearly considered a commodity, and thus is not suffering.
Moreover, Bitcoin now tends to be more of a medium- to long-term investment, rather than a mere speculative asset, and this often makes it not particularly attractive in the short term.
Therefore the altseason in which interesting short-term trades are possible thanks to the high volatility of altcoins seems to have been set aside for now, whereas we have entered a phase in which many prefer to focus on the medium to long term, and on Bitcoin.
However, it is not necessarily the case that this phase has to last long.