Market Retreat and Stablecoin Surge
The crypto market experienced a retreat from record-setting highs last month. Bitcoin declined 11.5% over the past month to $107,229, and Ethereum dropped 16.4% to $3,754. This broader market slowdown drove traders to seek yield opportunities through stablecoins, pushing transaction volume to unprecedented levels.
Vincent Liu, CIO of Kronos Research, noted that the stablecoin volume surge indicates traders were actively managing liquidity to buy price dips amid ongoing profit-taking in major cryptocurrencies. He explained that traders are staging capital to rotate between emerging narratives, using stablecoins as both a hedge and a yield-generating tool until deployment.
Record-Breaking Stablecoin Activity on Ethereum
Monthly transaction volume for stablecoins on Ethereum reached an all-time high of $2.82 trillion in October. This figure surpassed September's previous record of $1.94 trillion, marking a significant 45% increase month-over-month. This surge positioned stablecoin issuers as dominant revenue generators among crypto protocols.
Circle's USDC led the volume with $1.62 trillion in monthly transactions, while USDT recorded $895.5 billion last month. Both stablecoins experienced notable volume increases compared to the previous month.
Stablecoin Issuers Lead Revenue Generation
Stablecoin issuers consistently captured approximately 65% to 70% of total daily revenue across major protocol categories throughout October. They surpassed lending platforms, decentralized exchanges, collateralized debt positions, and blockchain infrastructure in terms of revenue generation.
MakerDAO's $DAI ranked third in stablecoin volume at $136 billion, a decrease from $141.2 billion in September and significantly lower than May's $470.7 billion. Min Jung, research associate at Presto Research, commented that stablecoins have become one of the hottest sectors following the Circle IPO and the passage of the GENIUS Act.
Drivers of Stablecoin Growth and Future Outlook
Yield farming around liquid yield tokens has been highly active, with new stablecoins featuring innovative concepts attracting users seeking returns. Tether and Circle base their earnings on the assets backing their stablecoins. They hold user deposits in relatively low-risk instruments like U.S. Treasuries and retain accrued interest as their primary profit source.
Nick Ruck, director at LVRG Research, stated that October's volume underscores a maturing crypto market where stablecoin activity has grown for non-speculative use cases such as payments and cross-border transactions. The record figures suggest continued institutional and retail adoption of dollar-pegged digital assets for various financial applications.