- Despite the increasing offer, stable coins are largely kept in derivatives, which limits their effects on market liquidity and puts the spot markets into trouble.
- The market is faced with a demand crisis and not confronted with a liquidity problem, since stable coins do not flow into the spot trade, which leads to higher volatility.
Since November 2024, the overall offer has been on the stable coins exploded. If you look at the numbers, everything actually looks good – but it is not, because reality is not that easy.
Most stable coins are actually on derivative exchanges and not on the spot market, which heats up liquidity. This means that real transactions have less influence on current price fluctuations than speculative trade.
Stablecoin Supply is Increasing, But Market Impact is Limited
“As long as stablecoin volume in derivatives exchanges does not flow into spot markets, we are likely to continue seeing high volatility in the short term.” – By @thekriptolic
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https://t.co/9pT9oPBAug pic.twitter.com/LUlNoD532A
— CryptoQuant.com (@cryptoquant_com) March 19, 2025
A market paradox: More stable coins – less influence
On the one hand, the growing range of stable coins should actually make better changes on the market. The stable coin reserves actually go back on the spot exchanges, while they have increased on the appointment exchanges. This explains a rather strange scenario when money seems to exist, but is not really in circulation where it should be.
Imagine a city that suddenly gets a truck full of fuel. Logically, the vehicles in this city can move more freely, don’t it? However, if the entire fuel is stored in a warehouse and is only accessible for a handful of humans, what good is that? This is exactly what is currently happening on the cryptom market.
Choose crisis – no liquidity problem
Many observers initially believed that a liquidity crisis was the main cause of the problem. However, the latest statistics indicate that the sector is haunted by a demand crisis.
Although there are large numbers of stablecoins, their influence on pricing remains negligible if they are not used immediately for the purchase of assets on the market. This also illustrates why market volatility remains high: the main activity focuses on derivatives that have a much more speculative character.
On the other hand, CNF reported that the market capitalization of StableCoin has recently exceeded the icherum with $ 236 billion. Usdt manages about $ 143.3 billion.
From large companies to individual investors, this number shows how constant different groups – from all types of institutions – use stable coins. However, this increase is not enough to bring the spot market back to life.
Hope for regulation and growing acceptance
Although the cash market is very slow at the moment, several developments could be a glimmer of hope. One of them assumes the American authorities.
Kristin Smith, CEO of Blockchain Association, speculates that laws on stable coins and the structure of the cryptom market are passed by August 2025 at the latest. If this regulation ensures more legal clarity, it is likely that the spot market will become active again.
In parallel to this growing interest in stable coins, a report by Artemis and Dune has also found from 19.6 million in February 2024 to more than 30 million in February 2025 that the number of active stable coin wallets rose by more than 50% last year. This increase indicates that stable coins are increasingly being used by normal investors, even if derivatives still determine the current stable coin trend.
Despite the disturbed market balance, investors remain optimistic
Apart from the regulation, the StableCoin market has just received new support from investing in this sector. On March 19, 2025, the startup Stable Sea successfully secured $ 3.5 million from Kindred Ventures. This indicates that investors continue to hope for the future of stable coins, even if the spot market has not recovered.
Nevertheless, the volatility will be a feature of the crypto area until the balance between spot and derivative markets will be resolved.
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