There's one sector of the crypto market that hasn't fully benefited from the widespread rally that's sent the price of bitcoin to near all-time highs for the year: stablecoins. 

As noted in a report by ratings agency Fitch, volumes in stablecoins and the aggregate market capitalization of the sector is lower. The Block's data dashboard shows total stablecoin supply has declined from $138 billion at the start of the year to $124 billion on July 3. 

To be clear, Tether's USDT has bucked this trend — picking up market share from its rivals since USDC's de-pegging event in March. 

Still, the monthly average of daily trading volumes of the top ten stablecoins declined from $53 billion in March 2023 to $28 billion in May. 

However, Fitch notes that there is better liquidity in the assets backing stablecoins. Stablecoins are meant to trade one to one against a fiat currency — typically the US dollar — but are not backed exclusively by them. The underpinnings of stablecoins include a wide range of assets with different liquidity profiles. 

"Within USDT's reserve portfolio, the portion of treasury bills and repos rose by 6pp and 5pp in 1Q, respectively, reaching 65% and 10% of reserves by end-1Q23," the firm noted. 

Binance also improved the liquidity position of its stablecoins. "The repos in the portfolio are overcollateralized by long-term US treasury securities and are callable daily," Fitch said.