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Stablecoin Marketcap Expected to Grow 2,140% in 5 Years as PayPal Enters

Tim Fries

Published: August 9, 2023 10:16 pm

Researchers at Bernstein expect the stablecoin market cap to grow 2,140% over the coming 5 years and hit $2.8 trillion from today’s $125 billion. The projection comes as stablecoins continue to garner the attention of both crypto and non-crypto companies, with PayPal being the latest giant to embrace these fiat-pegged currencies.

Stablecoin Market Worth to Hit $2.8 Trillion in 2028, Bernstein Projects

The global stablecoin market is projected to hit a market cap. of $2.8 trillion over the following five years, brokerage firm Bernstein noted in a new research report. Considering that the stablecoin market is currently worth around $125 billion, achieving this figure would represent a remarkable growth of 2140% over the forecast period.

If this projection comes to fruition, it would imply that the stablecoin market could hold a significantly higher value in five years compared to the current valuation of the entire cryptocurrency market, which stands at approximately $1.23 trillion.

According to Bernstein, stablecoins’ integration with consumer platforms is expected to become a major growth catalyst for this type of digital asset. This is because such integrations allow stablecoins to attract more users and spur distribution beyond crypto native platforms.

Currently, the stablecoin space is primarily dominated by Tether’s USDT, which has a market of more than $83 billion at the time of writing. The runners-up are USDC and DAI, with market valuations of $3.5 billion and $146 million, respectively. While individuals also use it, USDC is more prevalent among businesses as it offers an open-source smart contract allowing other companies to develop their blockchain products.

Meanwhile, algorithmic stablecoins, which aim to maintain stability through on-chain algorithms and mechanisms instead of relying on fiat collateral, have seen diminished popularity in the recent period. One of the main factors behind this decline was the contagious collapse of the Terra ecosystem last year.

CBDCs, a Noteworthy Contender to Stablecoin’s Dominance

While the growth of stablecoins is anticipated in the upcoming years, their trajectory is likely to encounter challenges. Central bank digital currencies (CBDCs) could emerge as a significant contender.

This is because CBDCs are government-issued digital currencies that offer specific benefits similar to stablecoins while backed by national central banks’ credibility and regulatory support.

Currently, China is leading the global CBDC race as the country continues to make non-stop efforts to boost the adoption of the digital yuan. At the same time, more central banks hopped on the CBDC bandwagon recently, including Japan, South Korea, and Russia.

This article originally appeared on The Tokenist