JPMorgan Says Rising Stablecoin Use May Not Drive Market Cap Growth

JPMorgan analysts argue that rising stablecoin transaction volumes will not necessarily translate into proportional growth in the sector's total market capitalization, citing higher token velocity and improved settlement efficiency as factors that allow existing supply to handle more activity.

The bank's research team has outlined a thesis that challenges bullish projections for stablecoin market cap expansion. While usage metrics continue to climb, JPMorgan contends that more efficient payment infrastructure means fewer new tokens need to be minted to support growing transaction flows.

Velocity Limits the Need for New Stablecoin Supply

The core of JPMorgan's argument rests on velocity, the rate at which each stablecoin unit changes hands. USDT's annual velocity on Ethereum currently sits at around 50, meaning each token is reused roughly 50 times per year. As payment networks mature, that turnover rate should increase further.

Higher velocity means the same pool of outstanding stablecoins can support significantly more transaction volume without requiring equivalent growth in circulating supply. JPMorgan estimated that even if stablecoins handled roughly $10 trillion in annual cross-border payments, the required stablecoin stock would be only about $200 billion.

According to a search-crawled copy of The Block's reporting, JPMorgan estimated onchain stablecoin transaction volume is running at an annual pace of about $17.2 trillion this year based on year-to-date data. That figure, if accurate, underscores how much activity the current supply base already supports.

Teresa Ho of JPMorgan noted that growth expectations should be tempered. "A more realistic scenario is that the market could grow two to three times from where we are right now," she said.

Current Sector Sits Near $292 Billion

The stablecoin sector's total market capitalization currently stands at approximately $292.2 billion, with USDT alone accounting for roughly $189.5 billion, or about 64.9% of the total. That concentration means USDT's velocity dynamics disproportionately shape the entire sector's relationship between usage and supply.

JPMorgan's public research projects the stablecoin market could reach $500 billion to $750 billion in the coming years, driven mainly by broader crypto market expansion and non-U.S. store-of-value demand rather than payments adoption alone.

A December 2025 follow-up report narrowed that range, projecting roughly $500 billion to $600 billion by 2028 rather than the trillion-dollar levels some industry forecasters have suggested. That would represent roughly a doubling from current levels, not the five- to tenfold expansion some bulls anticipate.

Payments Adoption Remains a Small Slice

One of the more striking data points in JPMorgan's analysis is how little of current stablecoin demand comes from actual payments. As of mid-2025, the bank estimated that payments adoption accounted for just 6% of stablecoin demand, or about $15 billion, against an estimated $250 billion market mostly used in crypto trading, DeFi, and collateral.

That breakdown matters because the bullish case for stablecoin market cap growth often assumes payments will become the dominant use case. If payments remain a secondary driver while trading and collateral use grow more efficiently through velocity, the supply expansion required could be far more modest than headlines suggest.

According to unconfirmed reports from The Block, consumer-to-business and merchant payments are growing faster than consumer-to-consumer payments, and Asia remains the dominant region for stablecoin usage. If merchant adoption accelerates, it could shift the demand composition, but JPMorgan's velocity thesis suggests even that growth would not require proportional supply expansion.

What Metrics Matter Beyond Market Cap

JPMorgan's framework suggests that market participants watching only stablecoin market cap for adoption signals may be using an incomplete metric. Transaction volume, velocity, and the ratio between the two offer a more nuanced picture of how stablecoins are actually being used.

The GENIUS Act, which passed in mid-2025, provided regulatory clarity for payment stablecoins in the United States. JPMorgan frames it as a key catalyst that legitimized stablecoin payment rails. But the bank also notes that yield restrictions, reserve rules, KYC/AML obligations, and competition from tokenized bank deposits all constrain how directly more payment usage translates into outstanding supply growth.

Tether's growing role as a corporate treasury holder, including its expanding Bitcoin reserves, adds another dimension. A stablecoin issuer diversifying into BTC reflects confidence in its existing revenue model rather than aggressive supply expansion.

The broader regulatory landscape for digital payments is also shifting. Markets like Brazil have introduced new crypto payment rules that could reshape how stablecoins compete with traditional payment infrastructure in emerging markets.

Meanwhile, the growth of prediction markets, with platforms like Polymarket and Kalshi reaching $150 billion in combined lifetime volume, illustrates how stablecoin-denominated activity can scale rapidly without requiring equivalent growth in the underlying token supply.

For investors and analysts tracking the stablecoin sector, JPMorgan's thesis points to a specific set of indicators worth monitoring: velocity trends, the payments-to-trading demand ratio, and tokenized deposit adoption rates. If velocity continues rising alongside transaction volume, the bank's argument that market cap growth will lag usage growth becomes increasingly difficult to dismiss.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.