TVL on Real-World Assets Soars 700% as Stablecoin and CBDC Adoption Surges in 2023
In a remarkable turn of events, the total value locked (TVL) on real-world assets has witnessed a staggering 700% surge year-to-date (YTD), reflecting the growing popularity of stablecoins and central bank digital currencies (CBDCs) in 2023.
A recent market report by CCData indicates a robust market sentiment after enduring several months of bearish numbers. Institutional demand for cryptocurrency products has been on the rise, particularly in Bitcoin (BTC), real-world assets, Assets Under Management (AUM), and derivatives. Notably, stablecoins, a preferred asset among traditional investors due to their reserve assets, experienced a decline in their market numbers.
This decline in stablecoin market capitalization can be attributed to increased signals of potential regulations by authorities and the rapid advancement of CBDCs. However, the situation took a positive turn in October, as new capital flowed into stablecoin market capitalization thanks to heightened interest from cryptocurrency funds and tokenization. Currently, the stablecoin market cap stands at $129 billion, 30% lower than its all-time high last year. Unlike alternative cryptocurrencies, stablecoins did not experience a sharp downturn during the market crash in 2022, as investors sought them as a hedge against inflation.
Analysts at CCData anticipate that the market share of stablecoins will continue to rise in the coming months, aligning with the overall growth of the cryptocurrency market. A significant boost to stablecoin growth has been the increasing volume in decentralized finance (DeFi), where stablecoins are commonly employed as bridge assets between wallets and DeFi protocols. The growth of DeFi has contributed to a positive outlook for stablecoins.
As central banks explore the potential of CBDCs and regulatory pressures mount, stablecoins have gained traction as a means to limit the growth and utility of private cryptocurrencies. Currently, 130 countries are exploring CBDCs to enhance payment options and establish effective cross-border transaction settlement models.
Looking ahead, the optimism in the market continues to expand, with the official rollout of more CBDCs and increased assets under management as institutional investors progressively enter the cryptocurrency market. Tokenized assets are expected to witness a 700% surge towards 2024, as institutions explore innovative ways to leverage the sector and drive associated products. This market growth will be fueled by the tokenization of treasury bonds, real estate, and private credit, attracting more capital and facilitating the exchange of real-world asset (RWA) products.
While the market outlook remains positive, it is essential to remember that cryptocurrency investments come with inherent risks. This article serves as informational purposes only and should not be considered investment advice.