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Stablecoins are steadily losing market share due to regulatory obstacles and volatile marketplaces.

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آوریل 2, 2023
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آوریل 2, 2023

Stablecoins were intended to have a constant worth, but recent months have shown that they are not immune to the erratic fluctuations in the cryptocurrency market. Furthermore, it has become increasingly clear over time that they closely correlate with changes in the price of Bitcoin [BTC].

Stablecoins’ steady fall

The value of the top five stablecoins by market capitalization—Tether [USDT], USD Coin [USDC], Binance USD [BUSD], DAI, and Pax Dollar [USDP]—has decreased recently, according to statistics from Santiment. As of the time of writing, these stablecoins had a total market value of about $125.9 billion, and the chart shows a clear downward tendency.

At the time of publication, this number was over 21% fewer than it had been for the comparable timeframe in 2022. It stayed, however, more than 100% greater than in 2021.

For cryptocurrency investors, stablecoins are usually the best choice because they offer a way to switch from volatile coins like Bitcoin to a more stable commodity. However, a decline in stablecoins’ market value could result in less availability.

It might also slow down other digital assets’ ascent. On the other hand, the probability of a favorable trend for Bitcoin may rise with an increase in the market capitalization of stablecoins.

The stablecoin purchasing power drop has slowed over the past week, according to Santiment’s chart. The delay may have been caused by the minimal volatility that Bitcoin and the larger altcoin market saw at the time.


Potential causes of a reduction

Regulatory worries and fears about the openness of its assets were two major sources of ongoing FUD for USDT over the years. More recently, when BUSD was classified as a security, it ran into a regulatory roadblock, prompting Paxos to briefly stop BUSD production until the regulatory problems are addressed.

After Silicon Valley Bank failed and Circle was exposed to over $3 billion, some FUD was surrounding USDC, raising doubts about the coin’s security.

Stablecoins have gradually lost their bases due to regulatory concerns and the ensuing FUD encircling them, though they have since regained them. However, because of the ambiguity regarding its regulatory position, the BUSD reserve has kept on decreasing.

The market capitalization of stablecoins has decreased as a result of these occurrences and other variables.


The ratio of BTC stablecoin supply

The Stable Coin Supply Ratio (SSR) has been increasing, according to statistics from CryptoQuant, despite a decline in the market capitalization of the leading stablecoins. The SSR was about 7.6 at the time this article was written, up from about four earlier in March.



A rise in the Stablecoin Supply Ratio (SSR) may indicate that Bitcoin is headed in a positive direction. (BTC). It shows that there is more money accessible to move from stablecoins into BTC. It might cause the demand for BTC to rise, which might raise the cost of the cryptocurrency.

At the time of this writing, Bitcoin was down less than 1%, selling at around $28,490. The long and short moving averages (yellow and blue lines) were also trending lower than the price change at publication time.