JPMorgan: Higher Stablecoin Velocity May Limit Market-Cap Growth

JPMorgan analysts in a new report led by managing director Nikolaos Panigirtzoglou say a sharp rise in stablecoin velocity could restrain growth in the total market capitalization of stablecoins even as onchain transaction volumes increase.

Velocity measures how often the same token circulates in transactions. Higher velocity means a given supply can settle more transactions, lowering demand for additional issuance. “In our opinion, the more widely used stablecoin-based payment systems become, the higher their efficiency and thus their velocity,” the analysts wrote. “In turn, higher velocity would likely limit the expansion of the stablecoin universe going forward, even if their usage in payments rises exponentially from here.”

The report finds the stablecoin market capitalization rose by nearly $100 billion over the past year. When yield-bearing stablecoins are included, the total exceeds $300 billion. Based on year-to-date figures, onchain stablecoin transaction volume is estimated to be running at an annual pace of about $17.2 trillion this year.

Analysts linked part of the volume increase to U.S. legislative activity last year, noting a pickup after passage of the GENIUS Act. They reported that peer-to-peer payments still make up the majority of activity, while consumer-to-business and merchant payments have grown at a faster rate. The report also notes continued dominance of Asia in stablecoin usage.

JPMorgan has previously taken a cautious view on long-term market-cap forecasts. In December the analysts projected a market cap around $500 billion to $600 billion by 2028 and did not expect stablecoins to reach trillion-dollar valuations. In May they characterized trillion-dollar forecasts from other commentators as “far too optimistic.”

The report explains the mechanics behind the view: higher velocity allows each stablecoin to support more transactions, so growth in payment activity does not translate directly into a need for a larger token supply.