JPMorgan: Stablecoin Demand Rises and Falls with Trading Needs

Forget the 'digital dollar' dream—stablecoins live and die by the crypto casino.

The Trading Engine

JPMorgan's latest analysis cuts through the hype. The report bypasses lofty talk of stablecoins replacing fiat for everyday coffee buys. Instead, it pins their utility—and thus their demand—squarely on their role as the primary settlement rail for crypto trading pairs. No active trading? Dwindling demand. It's a brutally simple equation that treats stablecoins less like revolutionary money and more like specialized financial plumbing.

A Niche, Not a Revolution

This framing is a cold shower for maximalist visions. It suggests stablecoins are a derivative of crypto volatility, not an independent force. Their growth is tethered to the speculative appetite on centralized and decentralized exchanges. When markets go quiet, these tokens don't circulate—they pile up in wallets, waiting for the next trading frenzy. It’s a pragmatic, if cynical, view from the traditional finance giants who see the tool but aren't buying the revolution—yet another case of Wall Street admiring the engine while dismissing the driver's map to a new financial world.

JPMorgan said stablecoin demand hinges on trading needs

JPMorgan maintains that the growth of stablecoins is closely tied to broader cryptocurrency activity. It explained that in the past, the market growth surged during BTC and ETH rallies and eased when digital assets slowed. Earlier in the bank’s July report, it had indicated that stablecoin demand is largely driven by trading needs — tokens that are used as cash or collateral in derivatives and DeFi markets, as well as for crypto-native companies to hold unused capital. By then, derivatives exchanges had contributed approximately $20 billion in stablecoins, placing them as the principal contributor to supply growth.

In their then report, it added, “The stablecoin universe is likely to continue to grow over the coming years broadly in line with the overall crypto market cap, perhaps reaching $500 billion–$600 billion by 2028, far lower than the most optimistic expectations of $2 trillion–$4 trillion.”

On the other hand, Citi still expects the stablecoin market to expand to $1.9 trillion by 2030 under normal conditions and potentially reach as high as $4 trillion in an upside scenario, compared with Standard Chartered’s $2 trillion projection for 2028.

JPMorgan just introduced its JPM Coin for institutional clients 

JPMorgan also cautioned that wider use of stablecoins for payments won’t automatically lead to a bigger market cap, as faster circulation reduces the need for higher outstanding balances. Instead, they anticipate that the greater use of payments WOULD increase the frequency of stablecoins transactions. With USDT’s velocity around 50, they estimate that supporting $10 trillion in cross-border payments would require only $200 billion in stablecoins.

Currently, more banks are taking an interest in stablecoins and exploring tokenized deposits. In November, JPMorgan, through its Kinexys unit, even introduced JPM Coin (JPMD) for institutional clients on Base, Ethereum’s LAYER 2 network incubated by Coinbase. It claimed the move would help both crypto-native and traditional companies transfer funds more quickly and efficiently. Furthermore, it argued that blockchain initiatives such as SWIFT’s experiments could help banks retain their position in international transfers, potentially limiting stablecoins’ use for institutional settlement. 

Its analysts also noted that CBDC initiatives, including the digital euro and digital yuan, could compete with private stablecoins by offering regulated payment options for cross-border and institutional use.

The analysts explained, “In all, we continue to anticipate stablecoin growth broadly in line with the overall crypto market universe over the coming years. Greater usage of stablecoins in payments does not necessarily imply a large increase in the required stock of stablecoins.”

Moreover, it asserted that blockchain projects targeting institutional payments could bolster banks by using non-bearer tokenized deposits, at the expense of privately issued stablecoins.

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