Stablecoin Boom: Why Rising Velocity Could Change Everything in Crypto

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• Stablecoin velocity has doubled, enabling more transactions without proportional supply growth.
  
• USDC leads high-speed financial use cases, while USDT dominates savings markets.
  
• Market still projected to hit $2 trillion despite shifting demand dynamics.

A sharp rise in Stablecoin activity is changing how analysts view the future of the sector. According to a new report from Standard Chartered, increasing “velocity” — how often stablecoins are used — may reduce the need for new token supply, even as transaction volumes continue to grow.

The shift reflects evolving use cases and deeper integration with traditional finance, signaling a more efficient and dynamic stablecoin ecosystem.

What Rising Stablecoin Velocity Means

Stablecoin velocity measures how frequently tokens are transacted relative to their total supply. Historically, higher transaction volumes were expected to drive demand for more tokens. But that assumption is now being challenged.

“If velocity remains constant, rising transactions will create demand for more stablecoins, but if it increases, that will not be the case,” said Geoff Kendrick.

In simple terms, if the same tokens are used more frequently, the system can handle higher transaction volumes without expanding supply at the same rate. This introduces a new layer of efficiency — and complexity — to market forecasts.

New Use Cases Driving the Shift

The report highlights that stablecoin velocity has doubled over the past two years, largely due to emerging applications. Growth is being fueled by increased activity in traditional finance (TradFi) and early-stage AI-driven payments.

Networks like Solana and Base have seen notable increases in usage, reflecting a shift toward faster, high-frequency transactions. Meanwhile, infrastructure linked to Coinbase is supporting experimental AI payment systems.

Importantly, this rise in velocity is not uniform across all use cases. Traditional functions like savings in emerging markets have not shown the same acceleration, suggesting a divergence in how stablecoins are being used globally.

USDC vs. USDT: A Tale of Two Use Cases

The report points to a growing divide between the two leading stablecoins. USDC, issued by Circle, has been the main driver of increased velocity. Its usage has surged since mid-2024, particularly in high-speed financial applications and new payment rails.

In contrast, USDT, issued by Tether, continues to dominate in lower-velocity use cases like savings and value storage in emerging markets.

This divergence suggests that each stablecoin is carving out a distinct role — with USDC aligning more with institutional and transactional use, while USDT remains a preferred option for capital preservation.

Despite these shifting dynamics, Standard Chartered maintains its bullish outlook. The bank still expects the stablecoin market to reach $2 trillion by 2028.

Also Read: Standard Chartered Predicts $1 Trillion Shift from Emerging Market Banks to Stablecoins by 2028

However, the path to that milestone may look different than previously assumed. Instead of being driven purely by supply growth, the next phase could be defined by how efficiently existing liquidity is utilized.

The rise in stablecoin velocity marks a significant evolution in the crypto economy. As usage patterns shift toward faster, more frequent transactions, the relationship between demand and supply is becoming less straightforward. For investors and policymakers alike, understanding this dynamic will be key to navigating the next stage of stablecoin adoption.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.