cryptocompare

Algorithmic stablecoin market share dropped by 10x from ATH: Report

The stablecoin market, in general, is going through hard times, though the algorithmic coins suffered the most.

The notorious failure of the Terra USD (UST) stablecoin affected the crypto market, but the algorithmic stablecoins took the harshest punch. Since its peak in April 2022, the market share of algorithmic stablecoins shrank almost tenfold.

According to a new report from CryptoCompare, the current market share of algorithmic stablecoins stands at 1.71%, while its all-time high record in April 2022 reached 12.4% of the whole crypto market. Before its crash, Terra USD accounted for 79.8% of the algorithmic stablecoin’s market share.

The stablecoin market is generally suffering, with January becoming the tenth consecutive month of decline in its market capitalization. In December 2022, centralized exchanges saw a net outflow of $3.65 billion in stablecoins — the largest since November 2021. According to CryptoCompare:

“The decline in stablecoin dominance suggests market participants are rotating out of stablecoins and into risk assets.”

Tether (USDT), USD Coin (USDC) and Binance USD (BUSD) remain the leaders in the stablecoin market, with USDT accounting for 48.7% of the market share — the highest dominance recorded since October 2021.

The report also highlights the so-called “stablecoin war,” heated up by Coinbase’s decision to introduce a zero-fee trade to swap USDT for USDC in December 2022. Minted by the exchange, USDC currently accounts for less than 1% of the stablecoins trading volume on Coinbase. Earlier in 2022, Binance also introduced its BUSD auto-conversion feature, which automatically converted users’ balances of USDC, USDP and TrueUSD to BUSD on a 1:1 basis.

In late January, the CEO of Visa, Al Kelly, expressed his belief that, along with central bank digital currencies, stablecoins have the potential to play a meaningful role in the payments space.

October sees lowest-ever daily trading volume for crypto products: Report

Despite the bad numbers of daily trading, there are some signs of market revival, at least for Bitcoin-based products.

As the crypto market shows signs of a gradual recovery, with Bitcoin (BTC) holding above the psychologically important $20,000 level after its initial crash to $17,600 in June, this month still sets a record low for an average daily aggregate product volume across all digital asset investment products.

According to the report from CryptoCompare, published on Oct. 27, the average daily trading volume of institutional crypto products had fallen 34.1% — to $61.3 million in October. Almost all the products covered in the report recorded a large decline in average daily volumes, ranging from -24.3% to -77.5%.

The downward trend in daily trading is not limited to the recent market turmoil but dates back to November 2021, with a slight exception for May 2022. This October became the second month since September 2020 in which average daily volumes have fallen under $100 million.

However, the report traces some optimistic developments in other market markers. The total assets under management (AUM) across all digital asset investment products rose 1.76% to $22.9 billion compared with September. This was the first increase in AUM since July.

AUM in trust products, which accounts for 77.3% of the market, rose 2.34% to $17.7 billion in October, while AUM represented by exchange-traded funds (ETFs) fell 1.59% to $2.21 billion.

Another important marker is net flows. This October, weekly net flows for Bitcoin-based products recorded inflows averaging $8.37 million in October, and short Bitcoin-based products recorded the largest outflows, averaging $5.03 million. The situation is a lot worse for Ether (ETH) products, which recorded the second-largest negative net flows of $2.87 million.

At the same time, Ethereum blockchain’s native token ETH recorded better gains than BTC by Oct. 26, jumping approximately 14% to reach its weekly high of $1,554. As of publication time, the price of ETH stands at $1,508.