Amid the stablecoin boom, Tether has doubled its capitalization since January 2020. Cardano and Ether led among the altcoins that appreciated more than Bitcoin in the second quarter.
Media coverage continued to focus on Bitcoin during the second quarter of 2020. Meanwhile, stablecoins received a notable boost in that period, according to the quarterly report that eToro released on July 22nd.
Since January 2020, the market capitalization of stablecoins has doubled. However, the inflow of fiat currency to stablecoins exceeded USD 5 billion in six months, according to the report.
Guy Hirsch, US Managing Director of eToro, says that a manager of a company in Pakistan or Iran can use a USD-pegged cryptocurrency, pay his suppliers, and even his employees, without worrying about uncontrolled inflation of fiat money. He says that they hope that “this will increase in the third-quarter and beyond, as a catalyst for a free and fair global economy that is resistant to censorship and corruption.”
Explosive Growth of Stablecoins
In 2018, amid euphoria over initial coin offerings (ICOs), stablecoins reached USD 1.4 billion worth of market capitalization. The quarterly report highlights that, two and a half years later, stablecoins have grown almost 10 times and are close to USD 11 billion worth of market capitalization.
Tether is in the vicinity of USD 10 billion worth of market capitalization, making it the third largest cryptocurrency by market capitalization. In comparison, Tether was number 28 in market capitalization in January 2018. The report also notes that Tether exceeds the value of assets like XRP, Bitcoin Cash, and Litecoin.
The eToro report highlights, among other findings, that investor sentiment about Bitcoin and gold became more correlated. The document states that “the price of Bitcoin and gold futures in June moved in the same direction 50% of the time, while the price of Bitcoin and the S&P 500 index moved in the same direction 62% of the time.”
Furthermore, many of the altcoins continued to show better performance than Bitcoin in the second quarter. Specifically, Cardano’s ADA and Ethereum’s Ether showed yields of 175% and 70%, respectively.
Decentralized finance (DeFi) has become an important part of the narrative in the field of cryptocurrencies, according to the report. The document notes that DeFi had more media mentions than the Bitcoin halving during the second quarter.
However, it highlights that these mentions of DeFi were limited to the specialized press. Furthermore, “despite the hype, the market is still extremely small, as it still has a few thousand users.”
Regarding eToro users, Tezos was the only cryptocurrency that recorded a growth in its investments on that platform. The rest of the cryptocurrencies recorded a decline in investments, whilst users invested more in stocks during the quarter.
Without a doubt, Bitcoin is the most prominent cryptocurrency in the market. However, stablecoins have shown significant growth in market capitalization. Novice investors can start by buying them before they venture into the first cryptocurrency.
By Willmen Blanco
