Citibank: Stable Coin may strengthen the US dollar, and BTC cannot end the dominant position of the US dollar

Citigroup Wealth Management stated in its latest report that the adoption and growth of stablecoins could "consolidate the long-term global dominance of the US dollar," which also challenges the argument that Bitcoin will end the dominance of fiat coins.

Stable Coin trading volume accounts for over 80% of the cryptocurrency coins, and clear regulation will definitely enhance its attractiveness

According to The Block, Citigroup's wealth strategist believes that Stable Coin not only has the potential to strengthen the dominance of the US dollar, but also challenges the idea that Bitcoin will one day end the dominance of the US dollar.

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

Because the vast majority of Stable Coins are pegged to the US dollar, while the issuer retains the US dollar and US Treasury bonds as reserves. If the US government takes further steps to legalize Stable Coins, it may consolidate the dominant position of the US dollar.

Clearer regulations may further enhance the attractiveness of Stable Coins. The demand for US Treasury bonds by Stable Coin issuers may increase by about 1% of the current purchase volume. Therefore, this type of cryptocurrency will not undermine the status of the US dollar, but can make it easier for the world to access the US dollar and solidify the long-standing global dominance of the US dollar.

Stablecoin trading volume surpasses Visa

The trading volume of Stable Coin has also reached a record high, with a transaction volume of 5.5 trillion US dollars in the first quarter of 2024. In comparison, Visa's transaction volume is about 3.9 trillion US dollars.

To address this challenge, Visa, PayPal, and other traditional players are also adjusting by offering their own Stable Coin or settling transactions with other companies' coins.

(PayPal successfully uses PYUSD Stable Coin to achieve instant commercial payments)

(Visa provides bank Stable Coin issuance services, connecting to the future tokenized asset market)

According to CoinGecko's data, the total market value of Stable Coins has reached a historical high, exceeding 200 billion US dollars, an increase of 13% in the past month. Among them, USDT still sits firmly on the throne with a total market value of up to 138.6 billion US dollars, USDC has a market value of 41.5 billion US dollars, and the third place is the rapidly rising USDe, with a market value doubling from 2.5 billion US dollars at the beginning of October to 5.6 billion US dollars.

(Stablecoin market cap surpasses 200 billion Meiyuan, reaching a new high, USDe jumps to third place)

This article Citigroup: Stable Coin may strengthen the US dollar, Bitcoin can't end the dominance of the US dollar first appeared on ChainNews ABMedia.