JP Morgan: The popularity of stablecoins is expected to boost dollar buying

The global popularity of stablecoins could drive trillions of dollars into the US dollar in the coming years, according to JPMorgan, even if estimates of potential demand for the digital asset are widely divergent. "Rather than accelerating de-dollarisation, the popularity of stablecoins has the potential to strengthen the US dollar's role in the global financial system," said Kunj Padh, Meera Chandan, Octavia Popescu and others from the JPMorgan team in a report on Tuesday.
Estimates of the eventual size of the stablecoin market vary widely among bank strategists, even within JPMorgan. One emerging market equity strategy team expects the market to eventually expand to about $2 trillion. The bank's US interest rate strategists are more cautious, estimating the size at about $500 billion. At the top end of the range, JPMorgan FX strategists expect about $1.40 trillion of additional dollar demand to support the growth of the stablecoin market by 2027. This is a large number, but it is still well below the Bank for International Settlements' latest statistics on the average daily trading volume of 8.60 trillion dollars for dollar currency pairs.