Private wealth management company Bernstein has projected stablecoins to grow by 2,140% in the next five years with huge developments trickling into the sector.
According to the report, the stablecoin market stands at $125 billion with USD Tether (USDT) and USD Circle (USDC) as leaders but is expected to hit $2.8 trillion by 2028.
If these forecasts become reality, it means that the entire cryptocurrency market will experience surging volumes as the stablecoin market is likely to grow alongside other assets.
Currently, the total crypto markets cap is at $1.19 trillion and will likely skyrocket as more institutional investors get involved with virtual currencies.
Analysts led by Gautam Chhugani argued that integration of consumer platforms will be crucial for the boom of stablecoins because it will have the leverage of capturing users and spreading distribution beyond multiple crypto platforms.
“Integration will become a growth flywheel for stablecoin. We expect major global financial and consumer platforms to issue co-branded stablecoins to power value-exchange on their platforms.”
The firm also noted that stablecoins have a slight advantage over traditional crypto assets because several jurisdictions have lined up detailed regulations for the asset most notably the Market In Crypto Asset (MiCA) Regulation.
As multiple countries launch Central Bank Digital Currencies (CBDC) to rival stablecoins, they are naturally giving more validity to stablecoins as a cross-section of crypto enthusiasts view CBDCs as instruments of government control.
“… a growth by regulated onshore stablecoins… Stablecoin regulation enjoys more political support than crypto regulation.”
Big firms can spark the surge
In recent years, the market has witnessed huge announcements by big traditional financial firms and crypto-based firms on stablecoins
Most recently, PayPal has launched a US Dollar backed stablecoin, PYUSD to help facilitate global payments with the added utility of linking payments to web3 and web2 markets.
The innovation led by new entrants in the stablecoin market will be a “hyper-fast financial settlement layer (layer 2 or centralized consumer platforms)” and would open up new possibilities within the space.
While the market is dominated by USDT with over $83 billion in market cap, others like USDC and DAI follow closely with a market cap of $3.5 billion and $146 million respectively. Many observers have predicted that new entrants could affect the market share of USDT should they meet their projected adoption.
Finally, Bernstein analysts stated that the stablecoin growth will rival bank deposits and saving instruments.
“Stablecoins and CBDC tokens, coupled with yield farming in decentralized markets, will compete with bank deposits as an investment or saving instrument.”