The total value locked in real-world assets has witnessed a remarkable 700% surge year-to-date (YTD) in tandem with the overall growth in decentralized finance (DeFi) figures throughout 2023, underscoring the ongoing bullish sentiment in the market.

CCData’s recent market report reveals the robust strength in the market, marking a shift from the bearish trends seen in previous months. Notably, institutional demand for cryptocurrency products has seen a substantial uptick in Q4 2023.

Institutional interest extends across Bitcoin (BTC), real-world assets, Assets Under Management (AUM), and derivatives, although stablecoins, typically favored by traditional investors for their backed reserves, experienced a decline.

The stablecoin market faced a dip at the beginning of the year, attributed to signals of stricter regulations by authorities and the rapid development of Central Bank Digital Currencies (CBDCs). However, stability returned as the stablecoin market capitalization rose in October, fueled by fresh capital inflows from cryptocurrency funds and tokenization.

As of now, the stablecoin market cap stands at $129 billion, which is 30% below its previous all-time high. While cryptocurrencies witnessed a sharp decline in value last year, stablecoins held their ground, serving as a hedge against inflation.

DeFi Volume Boosts Stablecoin Growth

Analysts from CCData anticipate an increase in market share for stablecoins in the coming months, aligning with the growth trajectory of other cryptocurrencies. The recent surge in DeFi numbers has played a crucial role in bolstering the growth of stablecoins.

Previously, the dip in market cap was attributed to a lack of yield activities, with stablecoins primarily serving as bridge assets between wallets and DeFi protocols. The incorporation of treasury bonds as collateral by many stablecoins has diversified their use beyond cash and cash equivalents or other crypto assets.

Looking ahead to 2024, the market holds optimism for wider growth. The rollout of more Central Bank Digital Currencies (CBDCs) and the increasing involvement of institutional investors are expected to contribute to the growth of assets under management (AUM) and further innovation in the tokenization of assets.

Institutions are showing keen interest in sectors that tokenize treasury bonds, real estate, and private credit. The industry anticipates a rise in capital flow into this sector, with continued innovation in protocols facilitating the exchange of Real-World Asset (RWA) products.