Wall Street bank JPMorgan Chase & Co. (JPM) said the stablecoin supply could reach $500 billion to $600 billion by 2028, far short of the most bullish $2 trillion to $4 trillion calls.

Stablecoin demand is still primarily a crypto-market story, not a payments story, according to the largest U.S. bank by assets.

JPMorgan noted that the stablecoin market has grown about $100 billion this year to roughly $308 billion, led by Tether’s USDT and Circle’s (CRCL) USDC.

Demand is still driven mainly by crypto trading and collateral needs across derivatives and decentralized finance (DeFi), with derivatives venues adding about $20 billion in stablecoin holdings alongside a surge in perpetual futures activity, the report said.

"The vast majority of stablecoin demand stems from their use as cash or collateral in the crypto ecosystem to facilitate crypto trading including derivatives trading, DeFi lending and borrowing," wrote analysts led by Nikolaos Panigirtzoglou, in the Wednesday report.

Stablecoins are cryptocurrencies pegged to assets such as fiat currencies or gold, but most often the U.S. dollar. They underpin much of the crypto economy, serving as payment rails and a tool for moving money across borders.

The analysts said payments are a smaller driver today but could grow as more providers test stablecoin-based rails for cross-border transfers.

Still, the report said wider payment use doesn’t automatically require a much larger stablecoin float because velocity, how quickly tokens circulate, can rise as integration deepens.

Banks and payment networks are also moving to protect their role in institutional flows through tokenized deposits and other blockchain initiatives, while Central Bank Digital Currency (CBDC) efforts could offer regulated alternatives that compete with private stablecoins, the report added.

Read more: Stablecoin Adoption Is ‘Exploding' — Here's Why Wall Street Is Going All-In