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JPMorgan predicts that the stablecoin market will reach a size of $500 billion by 2028. However, this forecast falls well short of optimistic expectations that the market value could be between $1 and $2 trillion in the same period.
JPMorgan: Stablecoin Market Could Reach $500 Billion by 2028, But Expectations Are Overly Optimistic
The report published on Thursday by the team led by JPMorgan strategist Nikolaos Panigirtzoglou drew a more cautious growth scenario for the future of the sector.
According to the report, the main driver of stablecoin adoption is still crypto-native activities and large-scale payment integration is still limited.
“Predictions that the stablecoin universe will grow to $1-2 trillion in a few years seem overly optimistic to us,” it was stated.
According to JPMorgan, around 88% of stablecoin demand comes from intra-crypto transactions, such as spot and futures, DeFi collateral, and crypto companies’ reserve assets. In comparison, payments account for only 6%.
The bank argues that even in the most optimistic scenario, the market size of stablecoins for payment purposes will show a limited increase.
It also said a large-scale capital shift from traditional bank deposits or money market funds to stablecoins was unlikely, citing low yields and difficulties in switching between fiat and crypto.
Some institutions are much more optimistic than JPMorgan. For example, Standard Chartered predicts that the supply of stablecoins could increase 10-fold by 2028, reaching $2 trillion, if the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Act, which is expected to be enacted in the US, is passed.
Pointing out that this law will bring legitimacy to the sector, Standard Chartered states that this could lead to a large increase in the supply of US-based stablecoins.
*This is not investment advice.