Transfer Volume of Stablecoin Increases 16 Times Since 2020

Stablecoins are an integral part of the cryptocurrency sector. These peg their market value to some external influence. Unlike other cryptocurrencies, these can be pegged with the US dollar or any valuable commodity such as gold. The distinguishing feature of stablecoins is touted as one of the main reasons behind its growth. It is also true that these have price stability by maintaining reserve assets as collateral or algorithmic formulas. 

Growth of Stablecoins 

The best phase of stablecoins is ongoing at the moment. The use of stablecoin has grown tremendously, up to 16 times in the last fours in the cryptocurrency market. This is unprecedented, to say the least. The growth level itself indicates the widespread adoption of cryptocurrencies. In October 2020, the stablecoin transfer volume was $100 billion. In April 2024, the transfer volume was as high as $1.68 trillion. According to a report published by Forbes, in March 2024, the transfer volume of Stablecoins exceeded $1 trillion across all providers in the market.

Factors Responsible for The Growth of Stablecoins

Many experts and crypto enthusiasts attribute several factors responsible for the remarkable growth of stablecoins. These include:

Risk Mitigation

Unlike ordinary cryptocurrencies, stablecoins are less risky. Therefore, many risk-averse and conservative investors also invest because this feature alone addresses the concerns of crypto market volatility. Therefore, risk mitigation is largely responsible for the wider and better adoption of cryptocurrencies into economic practices.

Superior Portfolio Management

Many crypto investors prefer these for better portfolio management. This is because they perceive these as the most effective tool to store value with higher levels of security and stability. 

Widespread Application

The potential of stablecoins already indicates widespread adoption and application. It also signifies better economic integration, and financial inclusion and is reshaping centralized traditional finance. Many are using these to buy properties, facilitate international borderless transactions, and secure loans. Thus, these promote a significantly high degree of participation in the international financial market. 

Also Read- Is Bitcoin the King of The Crypto World?

Conclusion

The growth in stablecoins is a clear indication that cryptocurrencies are no longer on the fringe. It also signifies the increasing credibility of stablecoins among investors of all hues including the risk-averse ones. The growth is also coinciding with other positive developments such as the approval of ETFs. These instances are a testimony that decentralized finance is gaining pace and may become a viable alternative to centralized financial systems.