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- Stablecoin growth has paused after a strong year.
- Weak trading and a softer dollar reduced demand.
- Long-term use cases still support recovery.
According to the report, the stablecoin market has stalled after a year of sharp growth. Lower trading volumes and a weaker US dollar slowed demand. Analysts still see strong tailwinds ahead. They expect wider economic use to revive momentum.
Last year was marked by rapid growth. Stablecoins saw an injection of $103 billion. The value surpassed $300 billion in October. October was marked by a significant event. A leveraged liquidation of significant severity occurred. Risk appetite took a hit. Investors withdrew from dollar-pegged coins.
Since then, the market has remained quiet. According to Adam Morgan McCarthy, a senior research analyst at Kaiko, there are two reasons for the quiet. Trading activity has decreased across the crypto space. The value of the dollar has decreased.
Weaker Dollar Reduces Demand for Stablecoins
The stablecoin, which is backed by the dollar, was supposed to provide the benefits of moving money quickly and at a low cost. In addition, the stablecoin was supposed to provide clear settlement and transparency.
Everyone was expecting the rapid adoption of the stablecoin following the passing of the Genius Act in July by US lawmakers. The US dollar lost value relative to other major currencies in the past year by about 9%. The yields at 4% have not helped the US dollar gain value.
Therefore, there have been fewer and fewer reasons to invest in the dollar stablecoin. The US Dollar Index has lost 11% since January 2025. The US Dollar Index may not have much support in the near term. When the US dollar loses value, exports increase, and the demand for the US dollar decreases.
Visa Pushes Stablecoin Payments for US Gig Workers
Nevertheless, the pause does not seem to have affected the large corporations’ investment plans. In fact, in November, Visa announced a pilot program that uses stablecoins to pay US gig economy workers. The New York Stock Exchange announced plans to build a tokenized trading platform that will use stablecoins as funding vehicles. The plans of asset managers and banks have also moved forward.
For example, BlackRock and JPMorgan announced plans to create stablecoins that will be used by their institutional clients. Citibank announced that it expects the issuance of stablecoins to reach $4 trillion by 2030. The US Treasury Secretary, Scott Bessent, expects the issuance to grow to $3 trillion by 2030.
Fabian Dori of Sygnum Bank said the next phase depends on real economic use cases. He pointed to tokenization, which turns assets like bonds and stocks into blockchain tokens, as a key stablecoin driver. Larry Fink has backed shared blockchains to cut fees and boost accountability, a view he highlighted at the World Economic Forum.
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