Stablecoin market on track to hit $1.2tn after Coinbase maps 20,000 ways to get there

After running 20,000 simulated growth paths, Coinbase has found what it sees as the most likely outcome: stablecoins swelling into a $1.2 trillion market by 2028.

The forecast comes from Coinbase Institutional, which ran simulations using recent monthly growth data to estimate how the market could evolve over the next few years.

Rather than what Coinbase’s head of research, David Duong, called a “finger in the air” guess at how much of the world’s money stablecoins might eventually absorb, Coinbase based its model on the real-world pace of adoption so far.

Duong said the result is “both realistic and consistent with our front-end rates model,” a way of testing how stablecoin growth might interact with short-term interest rates.

Though getting from today’s $276 billion to $1.2 trillion would require steady demand, equivalent to about $5.3 billion flowing into short-term US government debt each week.

That’s because stablecoin issuers like Tether and Circle typically back their tokens with assets like Treasury bills — short-term loans the government takes out to raise cash, which are usually repaid within a year.

Every time new stablecoins are created, issuers typically buy more of these bonds to hold in reserve.

A $1.2 trillion stablecoin market is a conservative projection compared to other analyses.

Four months ago, Standard Chartered forecasted that the stablecoin supply could surge to $2 trillion by 2028, citing favourable regulation under the Genius Act.

Even more bullish is Bitwise’s chief investment officer Matt Hougan, who in May predicted the market could hit $2.5 trillion “in no time” as firms like JPMorgan, Visa, and Bank of America move in.

Others, like Keyrock and Bitso, have also projected fast growth, estimating that stablecoins could power $1 out of every $8 in cross-border payments by 2030.

Crypto market movers

• Bitcoin has lost 0.7% in value in the past 24 hours and is trading at $114,740.
• Ethereum is up 0.8% in the same period to $4,760.

What we’re reading

• ‘Cluster’ of amended XRP ETF filings roll in as Ripple seals SEC case dismissal — DL News
• The risk-on environment remains — Milk Road
• MetaMask Unveils mUSD Stablecoin — Unchained
• Polymarket users lost millions of dollars to ‘bot-like’ bettors over the past year, study finds — DL News

Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at [email protected]*.*

View Comments