PayPal cryptocurrency has slight recovery after a red month

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Key facts:
  • The initial enthusiasm for PayPal cryptocurrency appears to be over.

  • With several stablecoins on the market, there is a lack of incentive to use PYUSD.

Payments platform PayPal’s stablecoin PYUSD has shown signs of recovery after its market capitalization plummeted. Precisely, the capitalization of this stablecoin was once again 190 million dollars (USD).

As the following graph shows, this slight recovery It occurs after spending two weeks around USD 187 million forming there a floor of its fall of USD 312 million. This figure, recorded a month ago, was its maximum capitalization since its launch eight months ago, in August 2023.

PYUSD market capitalization in the last week. Source: CoinMarketCap.

The brake on capital outflow takes place after the activation of initiatives that motivate the use of the stablecoin. The most recent is that PayPal’s international transfer service, Xoom, announced that it will not charge fees for PYUSD transactions. In addition to this, the Morpho lending platform began offering returns for depositing the currency in a vault.

These initiatives come after its capitalization lost traction amid regulatory challenges. As CriptoNoticias reported, PayPal reported late last year that it was cooperating with the SECthe US securities regulator, to present documentation of the currency that the agency requested through a subpoena regarding its concerns about the development.

What do PYUSD capitalization swings mean?

Market capitalization refers to the total value of all currencies in circulation of an asset. To calculate this, the amount is multiplied by its price, which in the case of the PayPal cryptocurrency is 1 dollar since it is a stablecoin anchored to the US currency.

If the capitalization of an asset falls, it can mean a reduction in demand for it, a decrease in investor confidence in the currency, or even the destruction of some supply. The latter refers to the issuer withdrawing coins from the market, either to balance supply and demand, comply with regulations or restructure its monetary strategy.

Something to keep in mind is that Falls or increases in the market capitalization of an asset do not imply changes in its price. In this sense, it is crucial to know that PYUSD will continue to maintain parity with the dollar as long as its issuance policy can be carried out correctly.

In other words, capitalization works as an indicator of the capital invested in an asset. Below that line, the decline of PYUSD reflects the end of the initial enthusiasm that generated its launch in the market. Although its slight recovery leaves on the table the possibility of a potential improvement if its use cases increase compared to the competition.

At the moment, PYUSD is in position 320 of the cryptocurrencies with the highest capitalization and number 10 in the stablecoin niche.as the following graph shows.

Stablecoins with the highest market capitalization. Source: CoinMarketCap.

The main competitors of the cryptocurrency created by PayPal are tether (USDT) and USD Coin (USDC), the stablecoins with the highest capitalization with USD 105.3 billion and USD 32 million respectively.

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