(Bloomberg) — PayPal Holdings Inc.’s widely touted introduction of its own stablecoin has done little to stop the contraction the of digital-asset sector that underpins the trading of most cryptocurrencies.
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The total market capitalization of stablecoins — a type of digital currency whose value is pegged to another asset class such as fiat – dropped to $123.8 billion as of September, according to researcher CCData. That’s the least since August 2021. The sector was $137.9 billion in December.
Stablecoin volume traded on centralized exchanges such as Coinbase Global Inc. fell 28.4%, to $331 billion in September, the lowest monthly total since July 2020, the researcher found.
The contraction comes amid an overall decline in crypto market activity since the sector was shaken by scandals and bankruptcies in 2022. Stablecoins are often used to facilitate trading among cryptocurrencies and to shield holdings from price volatility.
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While market caps of many stablecoins, such as USD Coin and BUSD, have continued to decline, sector leader Tether (USDT) has increased its dominance, CCData show. At $83.4 billion, USDT now accounts for 67.3% of the total stablecoin market — the highest percentage since March 2021, according to the researcher.
PayPal introduced its stablecoin in August, the first by a large financial company. It was touted by some proponents as a potentially significant boost to the sluggish adoption of digital tokens for payments. The token has a market cap of around $110 million, according to data tracker CoinGecko.
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