USDT market capitalization exceeds 83 billion USD, the rise trend diverges from the market situation

Recently, the market capitalization of USDT has continued to rise, once again breaking through the 83 billion USD mark, almost catching up to the historical peak set in early May 2022. Typically, as the largest stablecoin by market share, the rise in USDT's market capitalization is often seen as a precursor to a bull market. However, this time, while USDT's market capitalization is rising, the market conditions have not synchronized upward, and mainstream crypto assets like Bitcoin are still in a consolidation phase.

So, where exactly did these newly added USDT go? How much entered the trading market? Through a comprehensive analysis of the changes in the market capitalization of USDT, on-chain data, and trading data, we found the following key points:

1. As of June 3, the total market capitalization of stablecoins is approximately 129.216 billion USD, with a slight decrease of 0.87% over the past month and a decline of 6.22% since the beginning of the year.

2. USDT is currently the largest stablecoin by market capitalization, at approximately 83.212 billion USD, accounting for 64.40% of the total market cap, nearly 3 times the market cap of USDC. USDT's market capitalization has risen by 1.41% in the past month and has surged by 25.63% this year, approaching its historical peak.

3. Since the beginning of this year, the market capitalization of TRC-20 USDT has risen by 34.90%, while the market capitalization of ERC-20 USDT has risen by 19.23%. The growth trend of TRC-20 USDT is more significant, with a larger increment and faster growth rate, currently accounting for 54.07% of the total market capitalization of USDT.

4. Although the market capitalization of USDT is close to the peak in early May 2022, its internal structure has changed, with TRC-20 USDT gradually taking the dominant position. This change is crucial for understanding the market reactions caused by the fluctuations in the market capitalization of USDT, as there are differences in the application scenarios of TRC-20 USDT and ERC-20 USDT.

5. Since the beginning of this year, the daily on-chain trading volume of TRC-20 USDT has shown a significant rise trend, with an increase of about 71.76% year-to-date, while the daily on-chain trading volume of ERC-20 USDT has slightly decreased, with a drop of about 0.25%. The daily average on-chain trading volume of both USDT types is approximately 6.917 billion USDT.

6. Currently, the stock of ERC-20 USDT on exchanges is about 9.29 billion USDT, reaching a new high for the year. However, its daily trading volume has shown a significant shrinking trend. This month's average daily trading volume is only 0.0367 billion USDT, a decrease of 11.35% compared to May.

7. The amount of ERC-20 USDT currently locked in smart contracts accounts for approximately 15.03% of its circulating supply, which is at the level of the end of July 2022, lower than the proportion (around 20%) when the market capitalization was similar in early May 2022. This indicates that under the same market capitalization, the current scale of USDT in DeFi may not be as large as before.

8. The current number of independent active addresses on the ERC-20 USDT chain is approximately 56,800, lower than this year's average daily independent active address count of 87,000, showing an overall downward trend, indicating that the active user base of USDT may have decreased.

USDT total market capitalization exceeds 83.2 billion USD, the market capitalization of TRC-20 USDT has risen significantly by about 35% this year.

As of June 3, the total market capitalization of stablecoins is approximately $129.216 billion. USDT ranks first with a market capitalization of $83.212 billion, accounting for 64.40% of the total market capitalization. After experiencing a liquidity crisis in March, USDC has not shown significant improvement, with a current market capitalization of approximately $28.770 billion, accounting for 22.26% of the total market capitalization, about 1/3 of the market capitalization of USDT. Other stablecoins like BUSD, DAI, TUSD, USDP, and FRAX all have market capitalizations exceeding $1 billion, but still exhibit a magnitude gap compared to USDT and USDC. USDT remains the absolute leader in the stablecoin market.

From the trend, the total market capitalization of stablecoins has slightly decreased by 0.87% from 130.363 billion USD a month ago, and has decreased by 6.22% from 137.792 billion USD at the beginning of this year, showing an overall downward trend. Most stablecoins, such as USDC, BUSD, DAI, etc., have experienced varying degrees of decline in market capitalization.

Among the stablecoins with larger market capitalization, the market capitalization of the four stablecoins USDT, USDD, LUSD, and MAI has risen against the trend. Among them, USDT has the largest market capitalization and the most significant increase. Data shows that USDT's market capitalization has risen by 1.41% compared to 82.052 billion USD a month ago, and has significantly increased by 25.63% compared to 66.237 billion USD at the beginning of this year.

From the perspective of USDT's multi-chain composition, the total authorized amount of TRC-20 USDT (based on Tron) and ERC-20 USDT (based on Ethereum) is currently the highest, approximately 46.12 billion USDT and 36.28 billion USDT respectively, far exceeding the total authorized amount issued by other public chains. Considering the authorized but unissued amount, the actual issuance of TRC-20 USDT and ERC-20 USDT is 44.962 billion USDT and 36.199 billion USDT respectively, accounting for 97.61% of the total actual issuance of USDT.

TRC-20 USDT and ERC-20 USDT constitute almost the entire market capitalization of USDT. Since the beginning of this year, the market capitalization of both types of USDT has been continuously rising, with the market capitalization of TRC-20 USDT rising from 31.717 billion USDT to 42.790 billion USDT, an increase of about 34.90%, and the market capitalization of ERC-20 USDT rising from 27.996 billion USDT to 33.380 billion USDT, an increase of about 19.23%. In fact, since October 2022, the market capitalization changes of these two types of USDT have shown a divergence, with TRC-20 USDT exhibiting a more significant growth trend, larger increments, and faster growth rate.

Recently, the market capitalization of USDT has returned to the highs seen in early May 2022, but this hides changes in the internal composition of USDT, with TRC-20 USDT increasingly dominating. This change in composition will play an important role in understanding the market reactions prompted by the fluctuations in the market capitalization of USDT, as there are certain differences in the application scenarios of TRC-20 USDT and ERC-20 USDT.

The average daily on-chain transaction volume exceeds 6.9 billion USDT, exchange inventory rises, but transaction volume falls.

From the perspective of underlying usage, since the beginning of this year, the daily average on-chain transaction volume of TRC-20 USDT has shown a significant rise trend, increasing from 414,200 USDT at the beginning of the year to the current 711,400 USDT, with a growth rate of approximately 71.76%. The daily average transaction volume is about 9.37 billion USDT.

The daily on-chain trading volume of ERC-20 USDT has shown a slight downward trend, decreasing from 1.537 billion USDT at the beginning of the year to the current 1.541 billion USDT, a drop of approximately 0.25%, with an average daily trading volume of about 4.464 billion USDT. Overall, the average daily on-chain trading volume of these two types of USDT is approximately 6.917 billion USDT.

From a segmented market perspective, since the beginning of this year, the stock of ERC-20 USDT on exchanges has shown a significant rise trend, currently at approximately 9.29 billion USDT, the highest this year, up 34.62% from the year's lowest point of 6.90 billion USDT.

However, interestingly, while the stock of ERC-20 USDT in exchanges has been increasing, the daily trading volume has shown a significant contraction. This year, the average daily trading volume of ERC-20 USDT was 0.742 billion USDT, and after April, the average daily trading volume each month has been below the annual average. This month, the average daily trading volume of ERC-20 USDT was only 0.367 billion USDT, a month-on-month decrease of 11.35% compared to May, while May's month-on-month decrease was also 22.47%. Affected by the liquidity crisis of stablecoins in March, the month-on-month decrease in April was as high as 51.05%.

It can be seen that although the amount of USDT in the exchange has increased, it has not promoted the activity of centralized market trading, which may also be one of the reasons why the rise in USDT market capitalization has not been reflected in the coin price.

Looking at the USDT locked in DeFi protocols, the inflow situation is also not optimistic. Overall, the current amount of ERC-20 USDT locked in smart contracts accounts for about 15.03% of its circulating supply, equivalent to the level at the end of July 2022, which is lower than the proportion (about 20%) when the market capitalization was similar in early May 2022. This indicates that under the same scale of market capitalization, the current USDT scale in DeFi may not be as large as before.

From the recent changes in the locked amount of USDT in specific protocols, on Ethereum, the locked amount of USDT in Uniswap V3, Compound, and AAVE V2 has risen in the past month, with the most significant increase being Uniswap V3, which rose by 31.13%. Compared to the beginning of this year, it has also increased by 15.82%, but when compared to last year, the locked amount of USDT still shows a significant decline. On Tron, the most notable increase is JustMoney, where the locked amount of USDT grew by 46.30% in the last month, with a rise of 60.51% this year. The changes in the locked amount of USDT across different protocols vary significantly.

Looking at the data from multiple dimensions, the recently issued USDT has partially flowed into centralized exchanges, but it has not promoted actual trading, and the trading volume has continued to shrink. A small portion has also flowed into DeFi protocols, but it is mainly concentrated in a few leading protocols, and the overall scale is still below the level when the market capitalization was the same previously. Another possibility is that the newly issued TRC-20 USDT has flowed into other payment scenarios.

Bitcoin price is steadily rising, volatility is decreasing, and the number of independently active addresses on the USDT chain has seen a more significant decline.

The overall environment of the current market may also be a reason why the growth of USDT's market capitalization has not been reflected in the price changes of cryptocurrencies. On one hand, many mainstream assets represented by Bitcoin are currently in a sideways adjustment phase. Market data shows that although Bitcoin's price has been on an upward trend this year, this trend is approaching a "step" shape, with a long platform construction period and a decrease in the daily average price volatility. In this situation, funds may choose to continue to wait and see, which is reflected in the data as an increase in exchange inventories but a decrease in trading volume.

On the other hand, during the market consolidation phase, user activity has also declined. The number of independent active addresses on-chain has always been a good indicator of observing user scale. From the trend of changes in the number of independent active addresses on the Bitcoin chain this year, it has generally remained relatively stable, with a noticeable rebound after May, but it did not reach a new high for the year. Overall, there has not been a significant rise in the scale of active Bitcoin users.

In contrast, the number of independent active addresses on the ERC-20 USDT chain has shown a significant downward trend this year, currently around 56,800, a noticeable decline from the highest single-day independent active address count of 149,900 earlier in the year, and also far below this year's average daily independent active address count of 87,000. This suggests that the active user base of USDT is likely to have decreased.