Beyond stablecoins, the report also touches upon the sentiment within the crypto market, noting that the fear and greed index entered the “extreme greed” territory in late February.
KuCoin Research, the analytical arm of the leading global crypto exchange KuCoin, has unveiled its March edition report, highlighting the dominance of Tether (USDT) stablecoin issuance in February.
Surge in Stablecoin: USDT and USDC Issuance
According to the report, the issuance volume of USDT surged by $2.79 billion in February, while USD Coin (USDC) witnessed an increase of $1.76 billion. This surge in issuance propelled the overall scale of stablecoin issuance to expand further, indicating a growing trend of investors injecting liquidity into the market using stablecoins.
Surprisingly, despite the rise in the stablecoin scale, the volume of stablecoins held by Centralized Exchanges (CEX) did not witness a corresponding increase. Instead, lending rates for USDT within several exchanges remained high, suggesting that the existing scale of USDT might not be adequate to meet the diverse leverage demands in the market.
Consequently, spot lending rates on various CEXs soared, surpassing even the yields offered by US bonds by notable margins. The bullish trend in the crypto market has prompted speculation that the influx of stablecoins from traditional markets for arbitrage purposes will further fuel market expansion.
Furthermore, the report highlights the surge in FDUSD issuance and the recovery of TUSD, highlighting the dynamic nature of stablecoin ecosystems. In February alone, FDUSD experienced a remarkable increase in issuance by $710 million, reaching a total of $3.28 billion.
This surge brings FDUSD issuance scale close to the levels observed when it was initially launched in July 2023. On the other hand, TUSD’s price experienced fluctuations, with its premium compared to USDT widening initially but returning to the near 1:1 pegging range by the end of February.
However, amidst these developments, Circle’s announcement on February 21 regarding the cessation of USDC issuance on the TRON blockchain stands out as a notable development. This decision has reverberated throughout the TRON ecosystem, particularly impacting the largest DeFi applications and a substantial proportion of TUSD issuance volume concentrated on the TRON chain.
Crypto Market Sentiment and Key Interest Rate Decisions
Beyond stablecoins, the report also touches upon the sentiment within the crypto market, noting that the fear and greed index entered the “extreme greed” territory in late February, indicating an unusually optimistic sentiment coupled with strong market volatility.
Additionally, the market eagerly awaits the Federal Open Market Committee (FOMC) meeting scheduled for March 20, anticipating it to set the tone for early policy decisions in the current rate-cutting cycle.
Per market developments, the crypto sector has witnessed a convergence with advancements in Artificial Intelligence (AI), as exemplified by Arweave, which launched the Arweave AO testnet on February 27, a super-parallel computer, with plans to incorporate AI models into smart contracts and launch the mainnet in 2024.
The report highlights the issuance of native tokens by large-scale projects that previously faced delays, seizing the optimistic market sentiment. Projects from Solana and Cosmos confirmed airdrops and issued native tokens, stimulating discussions and market attention.
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