JPMorgan's outlook for the stablecoin market was many times lower than optimistic estimates

The market of stablecoins will grow to $500 billion by 2028, predicted JPMorgan. This is many times lower than the most optimistic forecasts, according to which the capitalization could be from $1 trillion to $2 trillion, the bank's analysts said. They are cautious about the current demand for cryptocurrencies, the rate of which is linked to real ones, and do not expect a large flow of funds into them from deposits and money markets.

"We believe overly optimistic projections that the stablecoin market will grow from the current $250 billion to $1-2 trillion in the coming years," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a research report quoted by CoinDesk.

Stablecoins are cryptocurrencies whose value is linked to other assets, such as gold or the dollar. They play an important role in the crypto market: they are used as a payment infrastructure and for international transfers as an alternative to the SWIFT system. But now the main driver of demand for stablecoins remains activity within the crypto market, rather than their mass introduction into the payment infrastructure, JPMorgan analysts noted. The bank estimates that about 88% of the current demand for stablecoins is formed by cryptocurrency activity, while real payments account for only about 6% of the turnover.

Even in a positive scenario, the growing popularity of steblecoins in settlements will only slightly increase the total market volume, JPMorgan analysts say. They are also skeptical of the idea that stablecoins will be able to displace traditional bank deposits or money market funds - due to the lack of yield and additional complexities in transfers between real (fiat) currencies and crypto-assets. Therefore, JPMorgan believes that the market will only grow to $500 billion by 2028: that is, two times the current level, not four to eight times, as in the most optimistic scenarios.

Analysts also rejected analogies to the Chinese digital yuan (e-CNY) or the Alipay and WeChat Pay systems, stressing that those are centralized and do not reflect how stablecoins work.

As a result, the bank expects a moderate increase in demand for stablecoins, backed by needs within the crypto industry, and rejects a mass adoption scenario.

In an April study, Standard Chartered noted that the passage of the GENIUS Act in the U.S., which regulates the issuance and collateralization of physical assets with stablecoins, could increase the supply of stablecoins 10-fold.

"The passage of the law will legitimize the stablecoin industry," the bank's analysts wrote at the time. "We estimate that it will lead to an increase in the total supply of stablecoins from $230 billion today to $2 trillion by the end of 2028," they added.

The passage of the GENIUS Act in June by the U.S. Senate led to a revitalization of the crypto industry, with a number of companies announcing that they intend to issue their own stablecoins. Shortly before this had IPO company Circle - the issuer of the second most capitalized steiblcoin USDT. The company's stock has since rallied to nearly $299 - nearly ten times the offering price. Such a rapid rally raised concerns even among one of the listing organizers: JPMorgan declared that the stock's growth was out of control and advised to sell the securities.

This article was AI-translated and verified by a human editor