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Investing.com -- JP Morgan said the stablecoin market is unlikely to balloon to the $1 trillion–$2 trillion forecasts, which are given by some crypto enthusiasts, saying the most demand remains tied to trading activity rather than everyday payments and will only lift the sector to about $500 billion by 2028.
The brokerage expects about 88% of today’s $250 billion stablecoin stock functions as cash for the crypto ecosystem, greasing trades, backing collateral and serving as idle balances for exchanges and decentralised‑finance platforms.
Less than 1% is linked to illicit use, about 6% to emerging‑market dollarisation, and another 6%, or roughly $15 billion, to payments.
“The vast majority of stablecoin demand likely stems from their role as the ‘lubricant’ in the crypto ecosystem,” analysts wrote.
Even assuming a ten‑fold jump in payment usage, the note adds, that slice would still grow by only about $150 billion.
JP Morgan’s base case envisages a doubling in overall crypto market capitalisation between the 2024 and 2028 bitcoin halvings, a scenario that implies a bitcoin price near $140,000, yet still translates into just 30% growth for stablecoins over the period as trading volumes, not payments, stay dominant.
Meanwhile, tougher global rules should keep illicit flows “flattish,” the bank said.
Analysts also rejected parallels with China’s e‑CNY rollout or the rise of Alipay and WeChat Pay, pointing out that central‑bank digital currencies and closed‑system wallets are fundamentally different from private, zero‑yield tokens on public blockchains.
On traditional markets, JP Morgan sees a “more modest deterioration” in the global bond supply‑demand balance next year but still expects curve‑steepening pressure.
Slowing quantitative tightening across the Fed, ECB, BoE and BoJ will trim, but not reverse, reduced official buying, while retail inflows into bond funds, now tracking an $800 billion annual pace, are increasingly skewed to shorter‑duration products, curbing their support for longer‑dated debt.
“We are looking for a more moderate expansion to $500 billion by 2028,” the analysts said, warning that hopes for a swift migration of bank deposits or money‑market assets into stablecoins ignore the appeal of yield‑bearing traditional instruments.