Stablecoin Purchases Surged Amid Wednesday's Crypto Market Drop

The crypto market took a turn for the worse on Wednesday when it lost nearly $30 billion in total market capitalization - but not every asset struggled to find buyers.

Certain stablecoins like USD-C, TUSD and DAI each witnessed a more than 200 percent increase in 24-hour trading volume amid the broader market sell-off as traders flocked to what they may have perceived to be safer alternatives in an effort to escape market volatility.

The surge in stablecoin trading volume isn't exactly surprising, given their main use case is to provide cryptocurrency users with the ability to convert volatile crypto positions into anti-fragile or 'stable' alternatives.

Bitcoin's breakage of the psychological support level of $6,000 on Nov. 14 was enough of a shock to turn the broader market risk-averse, which turned out to be the ultimate test for the younger stablecoins as it revealed which are becoming the most preferred - particularly during times of extreme market volatility.

The graph below depicts the increase in 24-hour trade volume of the six largest USD-pegged stablecoins by market capitalization from before the market dump, early Nov.14, to after on Nov. 15.

USD Coin, the regulated stablecoin backed by blockchain startups Circle and Coinbase, is the newest of the bunch yet witnessed the most notable uptick amid the market rout.

USD-C's 24-hour trading volume surged nearly 400 percent from just over $5 million on the morning of Nov 14 to more than of $25 million by the next day, representing its highest level of volume in a 24-hour window to date.

Although Tether was just the 4th best performer in terms of percent volume increase, its share of the trading volume in the six-member stablecoin market went largely unchanged between the start and conclusion of this week's sell-off.

According to data from CoinMarketCap, USDT's 24-hour volume was 97 percent of the $2.6 billion in total stablecoin volume on November 14th. Further, USDT held its ground on that front, seeing 96.9 percent of that volume the next day, when the total surged more than 100 percent to $5.5 billion.

Tether even began to lose its dollar-parity during the market sell-off - falling as low as $0.95 on the Kraken exchange - yet the closest competitor to USDT in terms of volume market share was PAX, at just 1 percent of the total stablecoin volume on Nov. 15.