Brevan Howard Digital, an alternative asset manager, recently released a report predicting that the market for stablecoins such as Tether (USDT) and USD Coin (USDC) will grow to trillions of dollars of supply and hundreds of trillions of dollars in transaction value in the coming years. Co-head of venture investments Peter Johnson and analyst Sai Nimmagadda wrote that stablecoins will “increasingly provide financial services to the global unbanked and underbanked, provide an escape from high-inflation currencies, and ignite an explosion of innovation built upon these new global open-network money movement rails.” The report also highlighted the potential of stablecoins, noting that payments giant PayPal (PYPL) recently launched its own stablecoin, PayPal USD (PYUSD).
The asset manager estimated that in 2022, stablecoins will settle over $11 trillion on-chain, surpassing the payment volume of Visa ($11.6 trillion) and reaching 14% of the volume settled by ACH, and over 1% the volume settled by Fedwire. Additionally, over 25 million blockchain addresses hold over $1 in stablecoins, which is comparable to the fifth largest U.S. bank by number of accounts. This demonstrates the potential for stablecoins to provide global financial services to customers underserved by traditional financial institutions.
The report also noted that stablecoin usage has shown a low correlation with crypto exchange volumes, suggesting that significant stablecoin transactions volumes are likely being used for non-speculative purposes. Furthermore, stablecoins have shown resilience in the recent crypto market downturn, with total market cap only dropping about 24% from its peak, compared with a 57% decline for the total crypto market cap.