Stablecoins Set To Eclipse ETFs, Forging A Multi-Trillion Dollar Market

Stablecoins are poised to become the next multi-trillion-dollar market, according to a prediction by Gabor Gurbacs, an advisor to Tether, one of the leading stablecoin issuers. Gurbac’s assertion places stablecoins at a pivotal juncture in the evolution of financial markets, drawing parallels to the monumental growth of exchange-traded funds (ETFs).

As the stablecoin market currently stands at over $130 billion, led by heavyweights like USDT, USDC, DAI, and TrueUSD, Gurbacs’s perspective presents an intriguing forecast for the future of finance.

Disruptive Potential Of Stablecoins: A Financial Paradigm Shift

Gurbacs recently articulated his vision on the X platform, detailing how stablecoins, much like their predecessors – stocks, hedge funds, mutual funds, and ETFs – have the potential to spawn multi-trillion-dollar markets.

He argues that stablecoins, with their unique attributes, are set to disrupt traditional financial instruments significantly. Highlighting their low fees, easy access, and real-world applicability in commerce, Gurbacs positions stablecoins as a digital asset and a fundamental shift in global finance.

Reflecting on the evolution of Tether’s USDT, Gurbacs reminisced about its modest beginnings in 2017, with a market cap under $100 million. He had predicted then that Tether could scale to a $100 billion market cap – a milestone now beyond accomplished. His projection for the next five years sees stablecoins grow in value and fundamentally alter the financial landscape.

Investment wrappers evolved from stocks to hedge funds to mutual funds towards ETFs, each creating a multi-trillion $ market. What’s next? In my view, it’s stablecoins. Here are a few attributes on why stablecoins have the potential to create the next multi-trillion $ markets. pic.twitter.com/QjM4iMmD4o

— Gabor Gurbacs (@gaborgurbacs) December 27, 2023

HKMA’s Perspective On Stablecoins

Echoing Gurbac’s vision towards stablecoin, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), recently expressed a similar sentiment.

Following the joint public consultation launched by the HKMA and the Financial Services and Treasury Bureau (FSTB) focusing on stablecoin regulation, Yue suggested that stablecoins could bridge traditional finance and the burgeoning crypto market.

Yue emphasized the continuous evolution of the crypto market and the potential role of stablecoins in integrating digital payments with the real economy. The Chief Executive of the HKMA noted:

In a scenario where stablecoins become one of the preferred payment options by the general public, we should reasonably expect further integration between the digital payment ecosystem and the real economy, and whether the stablecoin is indeed ‘stable’ will then become ever more important.

While Gurbacs’s and Yue’s insights suggest a burgeoning financial revolution with stablecoins leading the charge, it’s important to recognize the sector’s recent volatility. Over the past two years, the stablecoin market experienced a significant downturn, with its market cap plummeting from over $170 billion in 2021 to a low of $40 billion earlier this year.

However, the current trend indicates a resurgence. As of the latest data, the market cap has climbed to above $130 billion, marking a substantial recovery of roughly 225% from its January low, with Tether’s USDT having a 69.99% market dominance.

Featured image from Unsplash, Chart from TradingView