As October unfolds, the stablecoin market has seen some modest growth, but overall, its expansion has been sluggish. The sector is currently valued at $172.7 billion, with Ethereum and Tron accounting for the majority of circulating stablecoins. However, despite this growth, transfer volumes have taken a significant hit, continuing a downward trend that began in May.
Stablecoin Market Growth vs. Transfer Volume Decline
This weekend, the total value of stablecoins stands at $172.7 billion, up 27.93% from $134.99 billion recorded in January 2024, according to Defillama.com. Ethereum and Tron dominate the market, collectively issuing 83.82% of all stablecoins. Ethereum holds 48.9% of the supply, while Tron controls 34.92%. BNB Chain (3.18%), Arbitrum (2.58%), and Base (2.14%) round out the top five networks hosting stablecoins.
Although the market has expanded, transfer volumes tell a different story. Data from Artemis Terminal shows that stablecoin transfer volumes have been in sharp decline since peaking at $3.6 trillion in May. By September, this number had fallen to $1.6 trillion, and as of October, transfer volume has dipped further to just $1.2 trillion.
What’s Causing the Decline in Transfer Volume?
Several factors are contributing to this steep drop in transfer activity. While crypto markets saw gains earlier this year, particularly in March, April, and May, stablecoin transfers slowed as speculative trading decreased. Regulatory pressure has also increased, making traders more cautious. In calmer markets, fund transfers tend to decrease, as traders avoid moving assets unnecessarily when uncertainty is high.
Active stablecoin addresses have also declined, although not as drastically as transfer volumes. This suggests that while fewer transactions are taking place, a significant number of users continue to hold stablecoins without moving them. In October, Ethereum and Tron facilitated a combined $592.1 billion in transfers, accounting for 49.34% of the total volume.
Stablecoins as Investments, Not Just Payment Tools
Another notable trend is the growing preference for yield-bearing stablecoins, such as USDE, which are being held for longer periods rather than used for daily transactions. These coins offer returns on investment, encouraging holders to treat them more like assets rather than simple trading tools. This shift in behavior is partly responsible for the decline in transfer volumes, as more stablecoin users choose to “hold” instead of transact.
If market conditions change and volatility picks up, the demand for stablecoin transfers may rise again. Historically, traders flock to stablecoins during periods of market turbulence to protect their assets and make quick trades. For now, though, the stablecoin sector is evolving, with an emphasis on holding rather than rapid transfers.
