Stablecoin Usage Still High Despite Cryptocurrency Controversies And Bear Market

Stablecoins or cryptocurrencies that attempt to peg their market value to some external reference asset like fiat, have maintained high usage despite the prolonged crypto winter and a bear market.

Stablecoins are advertised as more stable and less volatile crypto assets, but this wasn't always the case. The term exploded in popularity in May when the algorithmic stablecoin of the Terra ecosystem UST de-pegged from the dollar, followed by the collapse of the ecosystem's native token LUNA.

The result was catastrophic. The Terra ecosystem crashed and wiped out around $60 billion worth of investment.

Following the collapse, both institutional and retail investors were left stunned. Some retail investors lost their life savings, while some institutional investors filed for bankruptcy.

Another implosion happened again in November. This time, it was not a stablecoin but a huge crypto derivatives exchange platform with global reach and billions in value. Like the Terra collapse, FTX's meltdown caused a loss of funds and firms filing for Chapter 11 bankruptcy protection.

As a domino effect, investors lost faith in CEXs, while many others doubted the entire cryptocurrency industry. This resulted in the mass exodus from exchanges and the massive dumping of various crypto assets.

The crypto market was pretty bitter in November.

Despite the fears and uncertainties plaguing the industry, a new report from on-chain market intelligence firm Glassnode, as shared by Reflexity Research co-founder Will Clemente, revealed that stablecoin usage remains high. Clemente highlighted that stablecoins are among the few crypto assets that have found product market fit despite the overall crypto market condition.

The co-founder, using Glassnode data, underlined the growth of stablecoins in various areas, including a new all-time high aggregate volume amid the prolonged crypto winter. The data, which is available below, shows the top 4 stablecoins exceeding $30 billion in aggregate volume.

Furthermore, stablecoin's aggregate volume showed its first spike above $20 billion in May and June, a period when the Terra ecosystem collapsed. It again spiked in September and dropped below $20 billion in October.

Interestingly, it achieved a surge of above $30 billion at the time of the FTX meltdown. The data also showed that the number of active stablecoin addresses returned to its 2021 peak during the second half of this year as investors dealt with the fallout of both Terra and FTX's collapse.

Aside from those, the data also showed that there are more than 6 million addresses with non-zero balances, which is also at its peak. According to Clemente, these are all due to stablecoin use cases, which include "Capital efficiency in crypto, giving access to USD to those without banking," among others.