JPMorgan analysts pushed back again on trillion-dollar projections for stablecoins, arguing that the market’s growth will remain in line with the broader crypto space.
The bank argued that the stablecoin market cannot be viewed independently, as its growth is closely intertwined with the overall performance of the crypto sector, warning that expectations of a $1 trillion market by 2028 are too optimistic.
In its Wednesday report, it revealed that the stablecoin market has swelled by roughly $100 billion this year to over $300 billion, with most of the increase coming from the two largest coins, Tether’s USDT and Circle’s USDC. USDT increased by roughly $48 billion in supply, and USDC by about $34 billion.
JPMorgan said stablecoin demand hinges on trading needs
JPMorgan maintains that the growth of stablecoins is closely tied to broader cryptocurrency activity. It explained that in the past, the market growth surged during BTC and ETH rallies and eased when digital assets slowed. Earlier in the bank’s July report, it had indicated that stablecoin demand is largely driven by trading needs — tokens that are used as cash or collateral in derivatives and DeFi markets, as well as for crypto-native companies to hold unused capital. By then, derivatives exchanges had contributed approximately $20 billion in stablecoins, placing them as the principal contributor to supply growth.
In their then report, it added, “The stablecoin universe is likely to continue to grow over the coming years broadly in line with the overall crypto market cap, perhaps reaching $500 billion–$600 billion by 2028, far lower than the most optimistic expectations of $2 trillion–$4 trillion.”
On the other hand, Citi still expects the stablecoin market to expand to $1.9 trillion by 2030 under normal conditions and potentially reach as high as $4 trillion in an upside scenario, compared with Standard Chartered’s $2 trillion projection for 2028.
JPMorgan just introduced its JPM Coin for institutional clients
JPMorgan also cautioned that wider use of stablecoins for payments won’t automatically lead to a bigger market cap, as faster circulation reduces the need for higher outstanding balances. Instead, they anticipate that the greater use of payments would increase the frequency of stablecoins transactions. With USDT’s velocity around 50, they estimate that supporting $10 trillion in cross-border payments would require only $200 billion in stablecoins.
Currently, more banks are taking an interest in stablecoins and exploring tokenized deposits. In November, JPMorgan, through its Kinexys unit, even introduced JPM Coin (JPMD) for institutional clients on Base, Ethereum’s layer 2 network incubated by Coinbase. It claimed the move would help both crypto-native and traditional companies transfer funds more quickly and efficiently. Furthermore, it argued that blockchain initiatives such as SWIFT’s experiments could help banks retain their position in international transfers, potentially limiting stablecoins’ use for institutional settlement.
Its analysts also noted that CBDC initiatives, including the digital euro and digital yuan, could compete with private stablecoins by offering regulated payment options for cross-border and institutional use.
The analysts explained, “In all, we continue to anticipate stablecoin growth broadly in line with the overall crypto market universe over the coming years. Greater usage of stablecoins in payments does not necessarily imply a large increase in the required stock of stablecoins.”
Moreover, it asserted that blockchain projects targeting institutional payments could bolster banks by using non-bearer tokenized deposits, at the expense of privately issued stablecoins.
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