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Kaiko Report: Traders are turning from fiat currencies to stablecoins, with Euro stablecoin trading volume surging tenfold in the past month

According to a market analysis by Kaiko, BTC's 60-day actual volatility has steadily decreased over the past decade, reaching a multi-year low before the US election. Altcoins have also experienced a similar trend, with ETH and SOL both dropping significantly from their annual highs in November. However, this situation has started to change since the election and President Trump's victory. In particular, XRP's volatility has sharply increased, with actual volatility rising by over 100% for the first time since July 2023.

The recent rise in cryptocurrency has led to an increase in demand for stablecoin liquidity both on-chain and off-chain. Since late October, the cost of borrowing USDT and USDC from Binance has more than doubled. Although these rates usually fluctuate based on market conditions and supply and demand dynamics, this growth indicates an increase in demand for leveraged positions in spot and futures markets. Meanwhile, stablecoin market capitalization has also reached a historic high.

In addition, stablecoin lending rates on Aave V3 also increased in November.

In the past few months, the cumulative trading volume of USDT-USD has shown a significant increase in net purchases since November, indicating that traders are shifting from fiat currency to stablecoins. USDT's dominance over other USD-backed stablecoins soared from 69% at the beginning of November to a 13-month high of 86% on November 26, before falling back to 80% last week.

In the past month, trading volume for Euro-backed stablecoins has surged tenfold, from a daily $5 million in October to over $70 million in early November, before slightly dropping last week. Since 2022, trading volume has remained above $20 million daily, indicating strong demand. This growth is mainly driven by Eurite (EURI) stablecoin and Circle's EURC, which account for over 90% of total November trading volume. Although EURC remains the market leader with about 50% market share, MiCA-compliant stablecoin EURI has gained attention since its launch on Binance at the end of August.

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