Stablecoins offer safe haven during Feb’s crypto crash

With the cryptocurrency market experiencing its worst turn in years, stablecoins have emerged from the fray as an attractive defensive asset for digital currency investors, the latest trading data from leading global crypto exchange Binance has revealed.

The global crypto market has taken a battering in recent months, with market cap falling by over 20% in February. The ever-popular Bitcoin recorded its biggest monthly loss since June 2022, losing one-fifth of its value, hitting a three-month low of US$78,273; Ethereum, the world’s second most popular crypto after Bitcoin (BTC), has lost nearly 40% of its value since the beginning of February.

Stablecoins, by contrast, have bucked the wider crypto market, growing by around 10% since the start of the year. The total market cap for stablecoins – which, unlike other cryptocurrencies, are pegged to either another currency, commodity or financial instrument – surged to a new all-time high, exceeding US$224 billion.

“This growth is driven by market turbulence prompting a shift to stablecoins for reduced volatility, increased regulatory clarity from new US stablecoin bills enhancing market credibility, and attractive yields from real-world assets (RWAs), particularly in private credit, which continues to draw investor interest,” Binance wrote in its monthly market update.

Over this same period, the overall crypto market declined by 13%, driven down by escalating US trade tensions, a broader equity market sell-off, and the record-breaking US$1.5 billion hack of the UAE-based crypto exchange Bybit. Ethereum was particularly badly affected by news of the breach, which made headlines in mid-February, losing 20% of its value in the month.

Among the worst performing of the top 10 cryptocurrencies by market cap were Solana, which lost nearly 40% of its value over February, Dogecoin (down 33.7%), Chainlink (down 33.6%), Cardano (down 23.8%) and Ethereum (down 20.0%).

Binance attributed the early 2025 crypto crash to broader economic ructions – turbulence which has also rattled the broader equity market – largely triggered by the Trump administration’s implementation of import tariffs on its closest trading partners (Canada and Mexico), as well as an additional tariffs on China, ultimately “[dampening] investor confidence in late February and into March”.

“This policy uncertainty triggered sharp fluctuations across risk assets, putting downward pressure on Bitcoin and other cryptocurrencies,” Binance wrote. The crypto trader added that, over the past month, the global crypto market value declined by more than a quarter, from US$3.6 trillion to US$2.8 trillion, “as traders moved to de-risk amid fears of an escalating trade war”.

Trump’s mercurial approach to policy has “prompted a flight to safety”, Binance said, “stalling the early-year momentum seen in digital assets”.

As well, the Trump administration’s delay in implementing its promised national BTC reserve plan has further unsettled markets.

“Originally expected to be a major bullish catalyst, the lack of clarity around the initiative contributed to investor uncertainty, leading to a 16% drop in Bitcoin and nearly US$3 billion in liquidations between February 24-26, its sharpest decline since the FTX collapse in 2022.”

“The convergence of macroeconomic and security challenges in recent weeks has certainly tested the market’s resilience,” said James Quinn-Kumar, Director of Community Engagement at Binance Australia.

“Sudden tariff moves and events like the Bybit incident prompted many to pull back on risk in the short term. However, it’s important to note that we aren’t seeing people give up on crypto altogether. Instead, they’re taking a more defensive stance until the storm passes.”

Aussie traders return to tried and true as memecoin frenzy cools

Australia’s crypto market has largely reflected global trends, according to Binance, echoing similar shifts in trading behaviour and asset preference.

Interest in altcoins and speculative tokens cooled from the peaks seen earlier in the year, with local traders flooding back to BTC in March.

Notably, trading activity in Trump’s memecoin ($TRUMP) and XRP subsided after a surge in January, resulting in both assets dropping out of the top slots by number of traders.

Meanwhile, Solana (SOL) continued to attract strong engagement, drawing more traders than Ethereum and cementing its position among the top three traded coins in Australia.

“The pullback in hype-driven trading, like the memecoin frenzy, indicates a maturing perspective among Australians,” said Quinn-Kumar.

“We’re seeing our community here choose stability and fundamentals over short-term fads when volatility picks up. The fact that stablecoins and Bitcoin usage are rising indicates a move back towards established cryptocurrencies and lower-volatility assets, while still maintaining involvement in the market through strategic asset rotation.”