Total Market Cap Surpasses $84 Billion — How Do Stablecoins Impact the Crypto Market?
In the crypto market, as the scale of stablecoins continues to expand, their influence grows ever stronger. Stablecoins are not only a bridge connecting on-chain and off-chain trading, but also play the role of safe-haven assets within the market and serve as important infrastructure for the DeFi market. During periods of significant market volatility, stablecoins appear with increasing frequency. Today, we will briefly explore the impact of stablecoins on the crypto market from dimensions including issuance, circulation, and OTC premiums.
Stablecoin Issuance
According to CoinGecko data, as of 10:00 AM Hong Kong time on April 26, 2021, the total market capitalization of stablecoins surpassed $84.17 billion, reaching another all-time high.
Among them, USDT has a market capitalization of $50.3 billion (including the total amount issued across various public chains). Although its market share among stablecoins has declined, it still firmly holds the first position with an absolute advantage of 60%.
As is well known, stablecoins in the crypto market can generally be classified into three categories — fiat-collateralized stablecoins , crypto-asset-collateralized stablecoins, and algorithmic stablecoins . Since fiat-collateralized stablecoins (such as USDT, USDC, TUSD, and USDK) currently occupy over 90% of the market share, our discussion of stablecoin issuance here will focus primarily on fiat-collateralized stablecoins.
Also according to CoinGecko data, in early January 2020, the total market capitalization of stablecoins was less than $40 billion. Subsequently, various stablecoins launched a frenzied "money printing" mode, showing a clear expansion trend, with a cumulative 592 issuance increases, a total market capitalization growth of $44.1 billion, and an increase of 112.5%. Compared with the average market capitalization in April of last year, this represents a year-on-year increase of 712.24%, meaning an almost 8-fold increase in just one year. It is evident that stablecoins have achieved rapid large-scale expansion recently, and currently, this expansion momentum shows no signs of significant attenuation.
On the other hand, stablecoin trading volume has also shown a significant growth trend since January of this year. The monthly average on-chain trading volume of stablecoins this year has reached $307 billion, a 200% increase compared to last year's monthly average on-chain trading volume.
Stablecoin Circulation — Where Do the Issued Stablecoins Go?
In the crypto market, most attention is paid to the amount of Bitcoin flowing out of trading platforms and the amount of stablecoins flowing into trading platforms. If, over a period of time, a trading platform's wallet simultaneously shows continuous Bitcoin outflows and continuous stablecoin inflows, this is generally interpreted as a signal that the market outlook is bullish. Let's combine data to verify the reliability of this indicator.
May 2020 ~ April 2021, stablecoin inflow to trading platforms data. Source: CryptoQuant
May 2020 ~ April 2021, trading platform stablecoin reserve data. Source: CryptoQuant
From the two charts above, we can see that from last June December, during the period when Bitcoin prices attacked from around $10,000 toward $20,000, the total stablecoin reserves on trading platforms increased from $1.5 billion to $3.3 billion, subsequently reaching a historical high of $10.6 billion in March 2021. Here, everyone should also note the significant slowdown phenomenon in the data chart of stablecoins flowing into trading platforms during July September 2020, which we will highlight later.
Meanwhile, since last August, Bitcoin balances in trading platform wallets have shown a continuous outflow trend, decreasing from 2.8 million at the beginning of August to 2.44 million at the end of December, and further to 2.15 million in April 2021, an outflow rate of 23.2%.
May 2020 ~ April 2021, Bitcoin held by trading platforms data. Source: CryptoQuant
During the same period, Bitcoin's price rose continuously from $10,000, successively breaking through multiple integer thresholds, once reaching $64,800 in the middle of this month, a cumulative increase of 548%.
There's also recent news: On the 24th of this month, a Glassnode chart shared by Moskovski Capital's Chief Investment Officer showed that on the 23rd, 2.37 billion USDT were deposited into crypto asset trading platforms. This fund inflow was second only to the fund flow when Tesla announced purchasing Bitcoin on February 3rd.
Coincidentally, just two days after this 2.37 billion USDT entered trading platforms, Bitcoin experienced a strong rebound, quickly rising above $52,000 after touching a low of $46,988, a single-day gain of over 5%. According to OKX market data, as of writing, the BTC price is reported at $52,774.
At this point, the information above seems to support the argument mentioned earlier in this section: _"If, over a period of time, a trading platform's wallet simultaneously shows continuous Bitcoin outflows and continuous stablecoin inflows, this is generally interpreted as a signal that the market outlook is bullish."_ Of course, this is not the focus of our discussion in this article. What we need to focus on next is another important flow direction for stablecoins besides the Bitcoin market — DeFi.
DeFi market total value locked changes, source: dapptotal
First, let's look at the trend of total value locked (TVL) in the DeFi market. According to statistics from dapptotal, we can see that with the rapid rise of DeFi in June 2020, reaching its first development peak in September, the value of on-chain locked assets increased from less than $1 billion to over $10 billion in just three months.
Among them, staking mining is an important application scenario in the DeFi market, which means that in addition to transferring held crypto assets such as ETH and BTC to DeFi, investors also need a large amount of stablecoins to complete trading . This also explains the question we left in the previous section: the reason for the periodic cliff-like decline in stablecoins flowing into trading platforms between July and September 2020.
From another perspective, looking at the turnover rate of stablecoins also further validates this view. Earlier we mentioned that the monthly average on-chain trading volume of USD stablecoins this year reached $307 billion, a 200% increase compared to last year's monthly average. However, the turnover rate of stablecoins this year (i.e., the ratio of on-chain trading volume to market capitalization) fell from 63% to 28%, and the percentage of stablecoins held by trading platforms as a proportion of total stablecoin supply fell from 27% to 17%. Meanwhile, the percentage of stablecoins in smart contracts as a proportion of each stablecoin's supply rose from 34% to 50%, indicating that mainstream investors holding stablecoins are increasingly inclined to deploy stablecoins as assets in DeFi to earn yields.
USDT**** OTC Premium
Recently, due to significant volatility in Bitcoin prices, OTC USDT prices have continued to rise. According to OKX OTC market information, the OTC price of USDT reached as high as 6.8 yuan or above, a premium of approximately 3.8% over the USD/CNY exchange rate. In the past week, USDT's OTC price has consistently remained above 6.64 yuan, with a weekly gain of approximately 1.50%, reaching as high as 6.83 yuan at one point. The OTC price of USDT also shows a clear premium compared to the USD/CNY exchange rate, and the premium magnitude presents a significant upward trend, with an average premium of approximately 2.59% in the past week, reaching as high as 3.43%.
OKX OTC real-time order book
We know that since USDT is a USD-pegged stablecoin, among users in mainland China, there is no on-exchange market for converting USDT to fiat currency — only OTC trading . Moreover, due to the high decentralization of OTC trading, for Tether, the company issuing USDT, it is clearly impossible to find effective market-making methods to maintain the exchange rate at 1:1. Any price deviation is due to changes in supply and demand balance. When USDT's value deviates from the official USD/CNY exchange rate, there are generally two possibilities:
First, supply and demand imbalance in OTC trading — demand exceeds supply, and sellers cannot meet the explosively growing market demand in the short term, thus creating a premium for USDT;
Second, supply and demand imbalance in the cryptocurrency market — the demand for on-exchange traders to convert Bitcoin and other crypto assets into stablecoins grows rapidly in the short term, thus creating a premium for USDT.
Regardless of which scenario occurs, Tether needs to increase USDT supply to maintain exchange rate stability. Taking the most recent example as an instance, from April 16-18, 2021, after Bitcoin hit a new high and then rapidly fell 20%, many traders were eager to convert cryptocurrency into stablecoins as a hedge, causing the OTC price of USDT against CNY to reach above 6.8 at one point. During this period, Tether also conducted multiple issuances to ensure market supply, judging by the frequency of issuance, forming the third small peak since 2021.
Conclusion
Overall, the market structure of stablecoins is quietly undergoing changes, especially after the accelerated rise of DeFi, which has greatly expanded the application scenarios of stablecoins. Since USD stablecoins are currently the most "stable" stablecoins in the market (in terms of pegging effectiveness), with relatively small price volatility and lower risks (mainly impermanent loss) participating in DeFi mining, investors' demand for fiat-collateralized stablecoins will remain at high levels before algorithmic stablecoins find a better development path. In this environment of structural change, the impact of changes in stablecoin market capitalization, or the magnitude of issuance increases, on market trends will correspondingly decrease. Investors need to consider more carefully the situation of stablecoins locked in smart contracts.
Disclaimer
This article may contain product-related content not applicable to your jurisdiction. This article is intended to provide general information only and does not accept responsibility for any factual errors or omissions herein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions regarding your specific situation, please consult your legal/tax/investment professional. The information appearing in this article (including market data and statistics, if any) is for general reference only. While we have taken all reasonable precautions in preparing these data and charts, we accept no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "Copyright © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, for example "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.
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