Definition:
Stablecoin market capitalization refers to the total value of all stablecoins in circulation.
A stablecoin is a type of cryptocurrency that is pegged to the value of a stable asset, such as the US dollar, gold, or other fiat currency, with the aim of reducing price volatility.
The stablecoin market capitalization is calculated by multiplying the total supply of each stablecoin by its current market price. This figure gives an indication of the overall size and health of the stablecoin market, and can be used to compare the relative popularity of each stablecoin.
For example: The cryptocurrency Tether, also known as USDT, is a stablecoin pegged to the US Dollar. One can buy $100 USDT with $100 USD, and vice versa.
In the photo below, you can see the stablecoin market capitalization since 2018. At it's peak, there was over $180 billion invested in stablecoins.
What to watch for:
Market size: The stablecoin market capitalization can provide insight into the overall size and growth of the stablecoin market. If the total market capitalization is increasing, it can indicate that the stablecoin market is expanding and that more assets are being locked in stablecoins.
However an uptick in stablecoin market capitalization can indicate that investors are seeking refuge from volatile crypto assets by shifting their investments into stable assets (stablecoins).
Market dominance: By comparing the market capitalization of different stablecoins, you can identify which stablecoins have the highest market share and therefore the most dominance in the market. This can indicate which stablecoins are most popular among investors and which have the most potential for growth.
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