- The drop in crypto prices caused the market cap, minus stablecoins, to fall below $3.28 trillion after $827M in liquidations.
- Treasury projections show that by 2028, $2 trillion of stablecoins will be held, mainly backed by Treasury Bills.
- New rules could lead to more yield in altcoins such as ETH, SOL and AAVE, altering how DeFi liquidity is managed.
The broader crypto market ended the week under pressure, retreating to a total valuation of $3.28 trillion, excluding stablecoins. This came after Thursday’s brutal selloff induced $827 million in long position unwinds. Bitcoin and Ethereum both finished the week in the red, down -4.0% and -8.4%, respectively.
Therefore, the total market cap that includes stablecoins currently stands at $3.41 trillion, down -3.5%. In the derivatives space, leading tokens such as SOL saw negative funding rates, a signal of waning short-term risk appetite.
Stablecoins Projected to Expand Rapidly by 2028
According to the U.S. Treasury Department, the stablecoin market may hit $2 trillion in capitalization by 2028. This estimate is significant, as the stablecoin market today is worth almost $230 billion. If realized, this would represent a near nine-fold increase. Much of this growth may be driven by regulatory developments, particularly compliance with U.S. Treasury Bill reserves. Circle’s USDC, for instance, stands to benefit from adherence to the proposed GENUIS Act, which emphasizes collateral transparency. As a result, USDC could challenge or surpass USDT in market dominance.
This potential expansion also intersects with wider macro trends. The anticipated demand surge for short-dated Treasury Bills may reduce yields in traditional markets. That shift could lower the opportunity cost of holding non-yielding assets like Bitcoin. Consequently, this market realignment might support longer-term inflows into major crypto assets.
Regulation May Shift Yield Dynamics Within DeFi
Meanwhile, the upcoming GENIUS and STABLE Acts are expected to reshape how stablecoins operate in decentralized finance. Notably, these regulations could remove yield incentives for stablecoin holdings in DeFi protocols. In turn, this may redirect capital toward alternative yield-generating digital assets. Ethereum, Solana, and AAVE are examples of tokens that may benefit from this reallocation, given their integration with on-chain finance platforms.
This shift could also improve overall liquidity across DeFi protocols. Greater liquidity not only enhances price stability but also facilitates easier entry for institutional capital. As a result, market participants may witness more stable trading conditions across altcoins and decentralized platforms.
Market Ratios Indicate Room for Expansion
At this time, the number of crypto assets is about 12 times bigger than stablecoins. With 230 billion in stablecoins backing the 3 trillion dollar crypto market (excluding stables), we can see how vital stable liquidity is for market depth.
Projecting this ratio forward using the $2 trillion stablecoin estimate suggests a theoretical total crypto market cap of $24 trillion. If this trajectory holds, it implies substantial room for market expansion over the next three to five years. While no guarantees exist, current data suggests a foundational shift in how liquidity and compliance interact with crypto asset valuations.
