The total supply of stablecoins has hit a record high in May 2021, yet stablecoin dominance has fallen to its lowest level since December 2021.
According to data from CoinMarketCap, the combined market capitalization of all stablecoins reached $85.3 billion in May, up from $76.4 billion in April. This is the highest monthly total on record (going back to May 2017), exceeding the previous record of $79 billion in April 2021.
However, despite the record-high supply of stablecoins, their market dominance relative to the total crypto market has been steadily declining. As of May 2021, stablecoins accounted for just 8.2% of the total market capitalization, down from a peak of 12.7% in December 2021.
The decline in stablecoin dominance is being driven by a surge in the value of Bitcoin, Ethereum, and other non-stablecoin digital assets. Since the beginning of 2021, Bitcoin’s market capitalization has nearly tripled, while Ethereum’s has increased by 150%.
The sustained strength of Bitcoin and other digital assets could mean that the stablecoin market will remain relatively small in the short-term. However, the growing demand for digital assets is seen as a long-term positive for the stablecoin market, given that stablecoins remain one of the safest and most widely used types of digital asset.