Citi: Stablecoins may strengthen the U.S. dollar, Bitcoin cannot end U.S. dollar dominance

In the latest report released, Citi Wealth stated that the adoption and growth of stablecoins may "consolidate the long-term global dominance of the US dollar", which also challenges the notion that Bitcoin will end the dominance of fiat currencies.

Stablecoin trading volume accounts for over 80% of cryptocurrencies, clear regulation will definitely increase its attractiveness

According to The Block report, Citi Wealth strategists believe that stablecoins not only have the potential to strengthen the dominance of the US Dollar, but also challenge the notion that Bitcoin will one day end the hegemony of the US Dollar.

Initially, cryptocurrencies like Bit were seen as competitors to central bank-issued currencies. In fact, some believed that Bit could end the dominance of the US Dollar. However, Citi wrote in a new report: Stablecoins, which account for more than four-fifths of cryptocurrency trading volume, are challenging this notion.

Because the vast majority of stablecoins are pegged to the US Dollar, and issuers hold US Dollars and US Treasuries as reserves. If the US government takes further steps to legalize stablecoins, it could consolidate the dominance of the US Dollar.

Clearer regulation could also further increase the attractiveness of stablecoins. The demand for US Treasuries from stablecoin issuers may increase slightly from the current purchase of around 1%. Therefore, this cryptocurrency will not usurp the position of the US Dollar, but can make it easier for the world to access the US Dollar and consolidate the long-standing global dominance of the US Dollar.

Stablecoin trading volume exceeds Visa

Stablecoin trading volume has also reached a historic high, reaching $5.5 trillion in the first quarter of 2024. In comparison, Visa's transaction volume is around $3.9 trillion.

To meet this challenge, Visa, PayPal and other traditional players are also making adjustments by offering their own stablecoins or settling transactions using other companies' currencies.

(PayPal successfully uses PYUSD stablecoin to achieve instant business payments)

(Visa provides bank stablecoin issuance services to connect to the future tokenized asset market)

According to data from CoinGecko, the total market capitalization of stablecoins has reached a new high, exceeding $200 billion, up 13% from the previous month. Among them, USDT still sits firmly in the top spot, with a total market value of $138.6 billion, USDC has a market value of $41.5 billion, and the third place is the rapidly rising USDe, whose market value has doubled from $2.5 billion in early October to $5.6 billion.

(Stablecoin market cap exceeds $200 billion to a new high, USDe rises to third place)