Bitwise CIO sees stablecoins AUM hitting $1 trillion with rising institutional interest

Bitwise chief investment officer Matt Hougan is projecting that stablecoins assets under management (AUM) will exceed a valuation of $1 trillion within the next two years. He said this in reaction to Stripe’s $1.1 billion acquisition of the Bridge stablecoin platform.

He said:

“Stablecoin AUM will top $1 trillion in 2026 imo, and that might be conservative.”

According to Hougan, the level of interest in the stablecoin sector suggests that explosive growth will be seen in the coming years. This opinion aligns with several crypto community members who believe that stablecoin adoption is set to rise, particularly as traditional financial institutions show more interest.

Although stablecoins have long been one of the most adopted products in the crypto industry, positive sentiment about the sub-sector has soared after Stripe’s acquisition. Many believe the deal is the biggest ever in the crypto industry. They also say it shows how important these fiat-pegged tokens are for the future of financial transactions.

Crypto entrepreneur Jeremy Black noted Stripe was willing to spend that money on Bridge because the company recognizes the limitless opportunities available with stablecoins.

He said:

“USD denominated Stablecoins are a $150b network today. M1-2 money supply in the US is 22T. So the growth opportunity for USD Stablecoins TODAY is 146,000x. Demand for US Dollars is infinite and the only constraint is access.”

Others also noted that stablecoins have shown the best product-market fit in the crypto industry, and the Stripe acquisition only validates the stablecoin technology infrastructure that Bridge offers.

Tether USDT cross $120 billion supply

Meanwhile, stablecoin issuer Tether maintains its dominance as its USDT stablecoin crossed $120 billion in supply for the first time ever. The stablecoin’s supply has grown by $30 billion this year alone, which is only a few billion short of its closest competitor, USDC.

Data from Defillama shows that Tron and Ethereum account for most of the USDT supply, 51.17% and 45.34%, respectively. However, the stablecoin is also gradually gaining market share on other networks such as BNB Smart Chain, The Open Network (TON), and Solana, where it saw sizable growth over the last month.

With Stripe also getting into the stablecoin game, Tether could face challenges on multiple fronts. PayPal is already in the stablecoin business, and Ripple is planning to get involved with RLUSD. However, these new entrants might not have much impact on Tether, given that the USDT market base is mostly in emerging economies.

The main reasons for stablecoins adoption

Meanwhile, the rising adoption of stablecoins highlights how traditional institutions see stablecoins as crucial for the next phase of finance. Stripe CEO Patrick Collison also highlighted this by comparing stablecoins to room-temperature superconductors, a crucial material scientists are still trying to develop.

He said:

“Stablecoins are room-temperature superconductors for financial services. Thanks to stablecoins, businesses around the world will benefit from significant speed, coverage, and cost improvements in the coming years.”

Collison added that Stripe will build the best stablecoin infrastructure globally through its acquisition, which Bridge also confirmed when it noted that the stablecoins sector is about to see more adoption and utility.

Berstein analysts also noted that Stripe’s purchase validates the usage of stablecoins. The analysts, led by Gautam Chugani, observed that tokens pegged to USD are now the cheapest means for making cross-border payments, and this is one of the products’ several benefits.

They wrote:

“With improvements in blockchain scalability, stablecoins have emerged as the leading use case for blockchains, particularly for cross-border payments.”

Meanwhile, stablecoins will likely see more adoption, especially as TradFi institutions continue to embrace blockchain technologies. These products serve as the rails connecting traditional finance to blockchain networks, and they will be crucial to the success of all financial innovations, including tokenization, a sector projected to be worth trillions in the next decade.