JPMorgan: Rising Stablecoin Use May Not Boost Market Cap

JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report that rising stablecoin usage may not lead to proportional growth in total stablecoin market capitalization. The key reason is increasing velocity—how often the same stablecoin is used in transactions—which has risen sharply over the past year, allowing the same amount of stablecoins to handle a much larger number of transactions.

Analyst Perspective on Velocity and Market Growth

"In our opinion, the more widely used stablecoin-based payment systems become, the higher their efficiency and thus their velocity," the JPMorgan analysts said. "In turn, higher velocity would likely limit the expansion of the stablecoin universe going forward, even if their usage in payments rises exponentially from here."

This represents a consistent position from the analysts. Last December, they projected the stablecoin market cap at around $500–$600 billion by 2028, declining to forecast trillion-dollar levels. In May of the prior year, the analysts also said projections of a trillion-dollar stablecoin market by others are "far too optimistic."

Market Cap and Growth Metrics

The stablecoin market cap has increased by nearly $100 billion over the past year, according to the JPMorgan analysts. When including yield-bearing stablecoins, the total size exceeds $300 billion. This growth has been faster than the overall crypto market cap, suggesting that stablecoins are being used for more than just trading or as collateral within crypto, the analysts noted.

Transaction Volume and Regulatory Catalyst

Onchain stablecoin transaction volume has grown significantly. The analysts estimate it is running at an annual pace of about $17.2 trillion this year based on year-to-date data. The growth in transaction volume increased significantly after the passage of the GENIUS Act in the U.S. last year and reflects increasing use of stablecoins for payments, according to the analysts.

Payment Use Cases and Geographic Distribution

While consumer-to-consumer payments still make up most activity, consumer-to-business and merchant payments are growing faster, the analysts said, citing a report from venture capital firm a16z crypto. Asia remains the dominant region for stablecoin usage, they added.