Stablecoin Market Capitalization Reaches New High

The total stablecoin market capitalization has achieved a record milestone, exceeding $200 billion, marking a 13% increase over the past month, as per CoinGecko data. Similarly, The Block's total stablecoin supply metric, which accounts for unissued USDT in the Tether treasury, has also crossed the $200 billion threshold. This growth reflects investor interest in higher yield opportunities on decentralized finance (DeFi) platforms, according to analysts.

Analysts from Coinbase, David Duong and David Han, pointed out that the increase in the stablecoin market cap indicates that investors are aiming to take advantage of the rising yields offered by DeFi lending protocols. "We think this represents a new influx of capital into the space looking to capitalize on elevated lending rates, more than threefold higher than long-term bond yields, or searching for higher beta trades onchain," the analysts suggested.

Data from DeFiLlama shows that the significant rise in the stablecoin market cap commenced around November 5, coinciding with Donald Trump’s victory in the U.S. presidential election. The analysts also noted that USDC deposit rates on Aave have doubled in the last month. "Stablecoin borrowing and lending rates have surged, reaching 10-20% annualized on Aave and Compound across nearly all of their deployed networks, including Ethereum and Base," they mentioned. Additionally, the total value locked in lending protocols hit an all-time high of $54 billion, surpassing the previous bull market peak of $52 billion.

In conjunction with the rising lending rates, Ethena’s yield-bearing token, sUSDe, has seen its annual percentage yield soar to over 24%, a sharp increase from around 13% in early November. However, DeFiLlama’s data forecasts that sUSDe’s APY may decrease below 19% in the coming month.

Coinbase analysts also highlighted emerging opportunities in higher-yielding assets, including HyperLiquid’s HYPE token and newly launched AI agent protocols. They stressed that these enhanced yields are available solely to onchain participants, prompting investors to engage with decentralized platforms to explore potential opportunities.

“Continued strength in bitcoin and other crypto majors has driven significant onchain activity across various sectors, including decentralized exchange (DEX) volumes, borrowing and lending activity, and stablecoin growth,” the analysts concluded.