Stable Coins Market Review 2018

You might have heard of a digital currency called USDT that has a similar value to USD. With the current bearish market, investors have been looking at different stable coin options as a long term store of value for their digital assets.  “Stable coin” is a type of cryptocurrencies that is pegged to a currency or to a commonly traded commodities, such as gold and legal tender. By anchoring to these assets at a ratio of 1:1, the price of stable coins is less volatile even with large fluctuation in the cryptocurrency market. Most stable coins name themselves according to the associated assets they are pegged to.

This article will analyze the evolution of stable coins in 2018 .

1. Emerging Stable Coins

At the beginning of 2018, there were only three stable coins in the market — Tether (USDT), Dai and BitUSD. As the stable coin invasion boomed along the bearish market, the number has grown to a total of nine coins, according to Stablecoins War and Stablecoin Index. These coins are USDT, PAX, TSUD, USDC, DAI, GUSD, BitUSD, SUSD, and nUSDT. Among them, USDT, PAX, and TSUD are the most popular options in the market.  

stable coin change
Source: Stablecoin Index, CoinCola Research Centre

In fact, the outbreak of stable coins did not start until October this year. When Tether (USDT) broke its 1:1 link to USD, questions whether a legitimate 1:1 peg is possible for other tokens which also broke the tie dropping below USD$1. Even if all coins are able to stabilize in the long run, the issue of stable coin’s stability, especially USDT, has risen to the surface. Two major reasons being:

  1. USDT has always been questioned for its stability where many crypto purists think that it is as volatile as other cryptocurrencies themselves, though Tether promised to set up an equivalent amount of bank reserve for USDT.
  2. Tether′s internal audit is not transparent and has never published audit reports on its account assets.
Source: CoinCola Research Centre

It should be noted that there are alternatives which investors can turn to instead. For example, EURS that is pegged to euros and WIT that is pegged to offshore RMB. Given the limited scalability and minimal trading volume, these will not be included in this discussion.

2. Small Growth Percentage in Stable Coin Market

The total market value of stable coins has increased slightly. Compared to the percentage increase in the beginning of the year, the total market value of stable coins has only increased from 2.25 billion USD to 2.63 billion USD which is approximately 17%. In terms of the overall growth of the market, the value of stable coins continued to rise to almost $2.97 billion USD, up till September. And as for the overall market value throughout 2018, stable coins rose to a peak of 2.97 billion USD.

However, in the past three months, the total market value of stable coins has shrunken as USDT lost its peg, down by 35% since September.  

Table:Changes of Market Value of Stable Coins in 2018 // Source: Stablecoin Index, CoinCola Research Centre

3. “Rising Stars” Seized Market Share of USDT

Current market data showed that USDT remains to take the biggest market share amongst all stable coins. As USDT struggles in the market, small players have the potential to seize a slice of the stable coin pie. In fact, the market share of USDT has decreased from 98.44% to 71.74% since October.

At present, USDC, TUSDT, PAX and GUSD are still accounted for a relatively high market share, with a percentage of 8.25%, 8.20%, 5.93% and 3.51% respectively, while the market share of DAI and BitUSD have declined to 2.12% and 0.2%, repsectively.

Source: Stablecoin Index, CoinCola Research Centre

Taking  USDT out of the picutre, USDC, PAX, TUSD, GUSD (issued in November) are the four uprising stable coins in the market , with an increase in market value of 71.8%, 39.2%, 22% and 117%, respectively. The values are almost double, comparing to the statistics in Novemeber.  On the contrary, the performance of DAI, BitUSD and SUSD are not optimal with their market values falling by -17.31%, – 50.99% and – 21.06% respectively.

Table:The development of other stable coins in addition to USDT //Source: Stablecoin Index, CoinCola Research Centre

4. Price Change of Stable Coins

The price of USDT has fluctuated significantly from October to November, and its price has started to rise since December. The performance of its price has been relatively stable at other times.

Table:Changes of USDT Price in 2018 //Source: Stablecoin Index

As far as the other types of stablecoins, the price of BitUSD has fallen sharply to $0.7USD since December, while the price of other stable coins is relatively stable to its 1:1 link..

Table:Changes of Price of Stable Coins in Addition to USDT in 2018 // Source: Stablecoin Index, CoinCola Research Centre

5. Trading Volume of Stable Coins

USDT still ranks the top in terms of trading volume, accounting for 95.81% over the past 24 hours.  By selection of latest trade volume of the stable coins (within 24h), it is found that the trade volume of USDT accounts for 95.81%, which is still the ″king” in the market.  PAX, GUSD and TUSD are the other stable coins with top ranking trading volume, accounting for 1.37%, 1.19% and 0.96%.

In contrast, the proportion of USDC (0.59%) and DAI (0.09%) is relatively low, and the proportion of SUSD and BitUSD did not make their way up.

Table:The trade volume of stable coins within 24h (December) // Source: Stablecoin Index, CoinCola Research Centre

6. Conclusion

  • A number of conclusions can be drawn from the analysis above:At present, the number of stable coins rises to a total of 9 (including but not limited to PAX, TUSD, and USDC etc.)
  • So far in 2018, the market share of stable coins has increased by 16.9%.
  • The market share of USDT has been seized by other stable coins, dropping from 98.44% to 71.74%; however, USDT remains to be the most traded coin with 95.81% in terms of trading volume.
  • Rising stable coins continue to rise, with USDC, PAX TUSD and GUSA topping the market.
  • Stable coins like BitUSD and SUSD is gradually exiting from the market.

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