A large amount of money has accumulated in the stablecoin market, but much of it remains unused, lowering the efficiency of the cryptocurrency market, an analysis showed.

Cointelegraph reported on March 12 that stablecoins have grown to about $300 billion and are effectively serving as a cash layer in the digital asset market. They have become a key payment tool and liquidity source used in crypto trading in place of fiat currency.

However, a large amount of funds appear to be locked up for long periods without moving. Data from on-chain analytics platforms DeFiLlama and Glassnode showed that a significant share of stablecoin supply remains “inactive,” barely moving for months while held in exchange wallets, personal wallets and corporate treasury accounts. This suggests stablecoins are increasingly being used as a simple store of value rather than being actively deployed in trading or investment.

This phenomenon could also affect market liquidity. Stablecoins are a core asset that forms trading pairs in the cryptocurrency market and serves as the foundation for liquidity. But if large sums are tied up for extended periods, the liquidity available for actual trading declines, potentially reducing market efficiency. Some analyses say wider spreads, execution delays and faster-than-expected liquidity declines are already being observed in some markets.

In particular, such “stagnant capital” could become a problem in stress situations when markets swing sharply. Stablecoins are, in theory, an immediate source of liquidity, but a large amount remains held for the long term, raising the possibility that sufficient funds may not flow into the market when needed.

Analysts also say a recent rise in investors’ risk-averse tendency has influenced this trend. They say that after the collapse of some centralised finance services in the past, investors have opted for capital-preservation strategies over yield-seeking ones, increasingly holding funds in stablecoins rather than actively deploying them. Some assessments also say this has reduced capital utilisation as activity such as lending, liquidity provision and DeFi investment has declined.

Experts say stablecoins need to be used more actively in real financial activity rather than remaining a simple storage tool. That is because stablecoins have the feature of “programmable money,” enabling automated financial transactions through smart contracts. As a result, analyses say that if large sums remain inactive for long periods, liquidity across the broader crypto ecosystem and its growth potential could be constrained.

Stablecoins need a structure that supports more active use across economic activity such as payments, lending and investment, beyond serving as a simple store of value, for them to become established as digital financial infrastructure.