Despite Macroeconomic Uncertainty, the Market Caps of Tether (USDT) and USD Coin (USDC) Have Grown Substantially Over the Past Eight Months

Despite the current volatility in the crypto market, fueled by macroeconomic uncertainty induced by the ongoing trade war, capital continues to flow into the ecosystem through stablecoins.

In the dynamic landscape of digital assets, stablecoins have emerged as a crucial pillar, facilitating seamless value transfer across diverse Web3 applications and serving as a critical liquidity source for traders engaging in crypto derivatives.

Despite the market downturn that began in November 2022 and the looming macroeconomic uncertainty, two leading stablecoins, Tether’s USDT and Circle’s USD Coin (USDC), have witnessed a remarkable surge in their market caps over the past eight months.

According to a chart shared by crypto financial services firm Matrixport on April 15, Tether’s flagship dollar-linked token has seen its market cap rise from around $113 billion in August to over $143 billion by April, indicating a 26% increase.

This growth comes despite Tether facing partial delistings across some European platforms due to non-compliance with the Markets in Crypto Assets (MiCA) regulations, which were approved by the European Union in May 2023 and require crypto firms to apply for licenses in the bloc. The regulations, designed to unify crypto rules across the 27-member EU, also mandate tighter disclosure and asset backing standards.

Meanwhile, USDC’s market cap has witnessed an even steeper escalation, surging from just over $31 billion to roughly $60 billion—an 93% increase.

In August last year, the combined market cap of USDT and USDC stood at approximately $144 billion, but by April, it had crossed the $203 billion threshold.

These figures highlight the sustained growth of major stablecoins even as digital assets’ prices have bled considerably over the past few months.

“Despite the macro uncertainty and regulatory challenges, we are seeing capital continue to flow into the crypto ecosystem through stablecoins,” said Matrixport analysts.

They added that these coinflows suggest that stablecoins are becoming increasingly embedded in the digital economy, even without a parallel bull run in crypto assets themselves.

The continued inflow of stablecoins comes against a complex regulatory backdrop in the United States. Just last week, the Securities and Exchange Commission (SEC) clarified that so-called “Covered Stablecoins”—fiat-backed, fully redeemable assets like USDT and USDC—do not fall under its jurisdiction as securities. This statement offers some relief to issuers.

However, this stance remains in contrast with legislative proposals like the STABLE Act, which seeks to impose bank-like regulatory requirements on all stablecoin issuers, and the more innovation-friendly GENIUS Act, which proposes a federal charter system to regulate stablecoins without stifling private-sector innovation. Both Acts are currently being discussed by the U.S. Congress.