More investors are swapping cryptocurrencies for stablecoins, signaling a potential shift toward the less risky asset.
Stablecoin dominance is near 16%, about 2.7 percentage points away from an all-time high set in mid-June. (This percentage is determined by how much of the total crypto market capitalization is made up of stablecoins; it is, from one perspective, a bearish indicator the stronger it becomes.)
“Stablecoins have been growing independently of market cycles simply because of their ability to improve financial inclusion,” Paolo Ardoino, chief technology officer of the world’s largest stablecoin by volume, Tether, said to TechCrunch. “Stablecoins are also created based on market supply and demand, so when some crypto prices fall, traders may see this as a buy opportunity to use stablecoin to move in and out of positions.”
The total stablecoin supply peaked in early April around $182.6 billion but has since fallen about 22% to $141.3 billion as of October 18, data from The Block shows.
Even with that said, stablecoins have expanded in volume vastly over the years, and will continue to grow as the crypto market develops, Ardoino added.
“Stablecoins are able to make the economy much more efficient by bringing digital dollars to the real world, putting U.S. dollars on a blockchain, attracting liquidity to the currency and allowing it to increase its dominance.”
Stablecoin demand maintains pace as other cryptocurrencies tumble by Jacquelyn Melinek originally published on TechCrunch
