JPMorgan "Stablecoin market unlikely to reach $1 trillion... Be wary of optimism"

JPMorgan maintained a conservative outlook on the growth of the stablecoin market. It said it would be difficult for the market to enter the $1 trillion range and analyzed that it is more likely to synchronize with the overall virtual asset (cryptocurrency) market trends rather than grow rapidly.

On the 18th (local time), The Block reported that JPMorgan's analysis team said in a report last Wednesday that the stablecoin market size increased by about $100 billion this year, surpassing a total of $300 billion. In particular, the supplies of Tether (USDT) and USDC increased by $48 billion and $34 billion respectively, accounting for the majority of the overall increase.

JPMorgan explained, "These phenomena dms stablecoin growth dl support the existing view that it still depends on internal activity within the virtual asset ecosystem." It pointed out that the core demand is for holding idle funds by related firms, such as collateral and means of payment for derivatives trading, decentralized finance (DeFi) lending, or virtual asset venture capital (VC).

In fact, as perpetual futures trading surged earlier this year, stablecoin holdings at derivatives exchanges increased by about $20 billion. The report analyzed that such trading demand is the most dominant factor driving the expansion of stablecoin supply.

JPMorgan's analysis team said, "Going forward, the stablecoin market will grow similarly to the trend of total virtual asset market capitalization," and "by 2028 the market size will be limited to around $500 billion~$600 billion." This is far below the $2 trillion~$4 trillion projections presented by some optimists. Previously, JPMorgan also dismissed other institutions' forecasts of 'surpassing $1 trillion' as "overly optimistic" in reports in May and July.

By contrast, competing investment banks still predict steep growth. Citigroup expects the stablecoin market to grow to $1.9 trillion in its base scenario by 2030, and up to $4 trillion in a bullish scenario. Standard Chartered (SC) also estimated the market size at $2 trillion by 2028, offering divergent forecasts.