JPMorgan: Stablecoin Usage Growth Won't Match Market Cap Rise

JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said rising stablecoin usage may not lead to proportional growth in total stablecoin market capitalization, according to a recent report. The key reason is rising velocity—how often the same stablecoin is used in transactions—which means the same amount of stablecoins can handle a much larger number of transactions.

Velocity Impact on Market Expansion

Stablecoin velocity has increased sharply over the past year, the JPMorgan analysts noted. "In our opinion, the more widely used stablecoin-based payment systems become, the higher their efficiency and thus their velocity," the analysts said. "In turn, higher velocity would likely limit the expansion of the stablecoin universe going forward, even if their usage in payments rises exponentially from here."

This cautious assessment aligns with JPMorgan's prior forecasts. Last December, the analysts projected the stablecoin market cap at around $500–$600 billion by 2028, and in May they called other projections of a trillion-dollar stablecoin market "far too optimistic."

Stablecoin Market and Transaction Growth

Despite the velocity constraint, stablecoin adoption metrics show significant expansion. The stablecoin market cap has increased by nearly $100 billion over the past year, according to the JPMorgan analysts. When including yield-bearing stablecoins, the total market cap exceeds $300 billion.

Onchain stablecoin transaction volume has grown significantly, with the analysts estimating it is running at an annual pace of about $17.2 trillion this year based on year-to-date data. This growth rate has exceeded the overall crypto market cap expansion, suggesting stablecoins are being used for purposes beyond trading or collateral within crypto.

Regulatory Catalyst and Payment Adoption

The growth in transaction volume increased significantly after the passage of the GENIUS Act in the U.S. last year, reflecting increasing use of stablecoins for payments, according to the analysts.

Payment types are shifting in composition. While consumer-to-consumer payments still make up most activity, consumer-to-business and merchant payments are growing faster, the analysts said, citing a report from venture capital firm a16z crypto. Asia remains the dominant region for stablecoin usage.