Recently, the cryptocurrency market has shown signs of recovery. Bitcoin (BTC) rose 7.3% over the week, reaching $73,238, while Ethereum (ETH) climbed 12.34% in seven days. The Crypto Fear and Greed Index, which had previously been in the 'extreme fear' zone, has also rebounded to 39 points.
Support for the 'Dry Powder' Theory
Since February, Circle has minted over $8 billion in USDC (USD stablecoin), pushing the total circulation of USDC past the $78 billion mark. Notably, this minting occurred during a relatively weak period for the crypto market.
This flow of capital is particularly significant as it indicates that funds are not leaving the ecosystem but are being deployed in the most active networks, such as trading and decentralized finance (DeFi News). In traditional finance, this phenomenon is referred to as 'dry powder,' which means holding capital at the ready to be quickly deployed when market conditions become favorable.
USDC Emerges in Stablecoin Competition
In this context, USDC has for the first time surpassed Tether's USDT in adjusted trading volume, marking the first occurrence since 2019. The adjusted trading volume excludes automated transfers and internal liquidity, providing a clearer reflection of real economic activity. Data shows that USDC's adjusted trading volume this year is approximately $2.2 trillion, compared to USDT's $1.3 trillion, giving USDC a 64% market share.
The Importance of Scale Effects
Stablecoins are projected to handle transaction volumes of up to $33 trillion by 2025, comparable to Visa's annual transaction volume. Globally, especially in regions where local currencies are depreciating significantly, stablecoins are playing an increasingly important role. For instance, in Nigeria, 59% of crypto users utilize USDT as a dollar savings account to hedge against local currency depreciation risks. Similar trends are observed in Argentina, Colombia, and the Philippines. This indicates that the capital base of stablecoins is becoming increasingly large and globalized, actively seeking investment opportunities.
U.S. Treasury Secretary Janet Yellen has predicted that by 2030, the stablecoin market could reach $3 trillion. As crypto market sentiment gradually warms and the total market capitalization of stablecoins surpasses $300 billion, the infrastructure to support the next wave of capital inflows is steadily being built.
The rise in USDC supply may signal an abundance of 'dry powder' in the market. Investors hold stablecoins to quickly deploy funds when market conditions improve. The significant minting of USDC indicates that capital is poised to flow into Bitcoin, Ethereum, or the DeFi News sector as soon as market sentiment improves.
Estimates suggest that with the ongoing global demand for digital dollars, the stablecoin market could reach approximately $3 trillion by 2030.