Stablecoin Market Hits $200 Billion

The combined market capitalization of the five largest stablecoins surpassed $200 billion for the first time after Treasury Secretary Scott Bessent’s commitment to utilizing digital assets to uphold the U.S. dollar as the leading reserve currency.

The market cap of these coins, pegged to real-world values like the U.S. dollar, peaked at $205 billion, according to Glassnode data. This increase in demand is attributed to investors seeking stability amidst the decline of cryptocurrencies such as Bitcoin (BTC) and Ether (ETH).

Since President Donald Trump won the election, the stablecoin market cap has surged by $40 billion. With cryptocurrencies and U.S. equities facing challenges in recent weeks, stablecoins have emerged as apparent winners in the market.

Market leader Tether’s USDT has maintained a market cap of around $140 billion since December, while its second-place competitor, USDC, issued by Circle, is close to $60 billion—an increase of $25 billion since the election.

At the Digital Asset Summit on Friday, Bessent stated, “We are going to keep the U.S. the dominant reserve currency, and we will use stablecoins to do it.”

Bessent’s comments emphasize concerns over macroeconomic and geopolitical uncertainties that could diminish foreign demand for U.S. debt, potentially raising treasury yields. In the past year, both Japan and China, the largest U.S. Treasuries holders, have reduced their investments.

For the dollar to retain its status as the world’s reserve currency, there needs to be consistent demand for U.S. debt. The administration has identified stablecoins as a strategic ally in this endeavor.

By holding U.S. debt as reserves, stablecoins can help lower Treasury yields and simultaneously enhance the global reach and dominance of the dollar. Stablecoins must ensure they have sufficient dollars available to repay investors looking to cash out, and Tether is already among the largest holders of three-month U.S. Treasuries.