Stablecoin market cap unlikely to hit $2 trillion by 2028: JPMorgan

• JPMorgan stated that predictions of a $1-$2 trillion stablecoin market valuation by 2028 are highly unlikely.

• Instead, the bank predicts that the stablecoin market cap could reach $500 billion by 2028, assuming current growth rate continues.

• JPMorgan dismissed the idea that stablecoins will replace traditional currencies, citing that crypto-native demand dominates its market.

In a note to investors on Thursday, JPMorgan Chase estimated that the stablecoin market could reach $500 billion by 2028, a modest prediction compared to popular forecasts of a $1-$2 trillion market capitalization increase over the same period.

Stablecoin market cap won't reach $2 trillion by 2028

JPMorgan Chase revealed its outlook for the stablecoin market, highlighting a $500 billion valuation by 2028.

The bank challenged forecasts of a $1-$2 trillion stablecoin market cap by 2028, calling such predictions far-fetched compared with the sector's current $250 billion value.

"We find forecasts for an exponential expansion of the stablecoin universe from $250 billion currently to $1 trillion-$2 trillion over the coming years as far too optimistic," analysts led by Nikolaos Panigirtzoglou wrote in a note to investors on Thursday.

The report highlights that stablecoin adoption for global payments remains at 6% compared to an 88% demand in crypto-native environments. It added that the digital asset class is recognized more for crypto-related services rather than everyday transactions.

As a result, the analysts debunked the notion that stablecoins would replace traditional currencies, citing a lack of yield and difficulties moving between fiat and crypto.

"The idea that stablecoins will replace traditional money for everyday use is still far from reality," the strategists added.

JPMorgan further rejected comparisons between stablecoins and China's e-CNY rollout, as well as the rise of platforms like Alipay and WeChat Pay.

"Neither the rapid expansion of e-CNY nor the success of Alipay and WeChat Pay represent templates for stablecoin expansion in the future," JPMorgan wrote.

The prediction comes below estimates made by other experts, including analysts from Standard Chartered and Bernstein, as well as Ripple executives, who projected a stablecoin market cap growth of $1-$2 trillion over the next few years.

The expectation also comes amid progress in stablecoin legislation in the US, particularly with the Guidance and Establishing Innovation for US Stablecoins (GENIUS) bill. The bill passed the Senate in June and is set to face the House this month, alongside other crypto regulatory bills.

House Financial Services Committee Chairman French Hill and other congressional leaders have designated the week of July 14 as "Crypto Week," during which lawmakers are set to review the CLARITY bill, the Anti-CBDC Surveillance State Act, and the GENIUS bill.