Here’s why stablecoins and not Bitcoin is the new ‘safe haven’
Stablecoins appear to have done very well in an otherwise turbulent year for most mainstream cryptocurrencies. While most cryptocurrencies have rebounded from their deficits, stablecoins maintained their course throughout.
Now, the question remains- Should investors continue to look at stablecoins for long-term gains? Well, it’s important to note that after years of presence in the market, the role of stablecoins has been regularly scrutinized. Coins such as Tether have a massive $80 billion market cap at press time.
One of the primary ideas behind launching stablecoins was to bridge the gap with fiat currencies. Despite all the criticisms, there has been a huge surge in dollar-backed cryptocurrencies.
Furthermore, the largest stablecoins by market capitalization are Tether, USD Coin, Binance USD, TerraUSD, and Dai. All of these are pegged to the U.S. dollar while there are others that are valued against gold and silver. Well, their growth in recent months cannot be undermined.
Source: Coin Metrics’ Formula Builder
Stablecoins are used for various purposes in the crypto world. They are used during cash transactions between businesses. And, also to avoid the risk of volatility.
Notably, there has been a significant increase in the amount of ETH addresses holding PAXG. The numbers have surged by 15% since 1 February 2022 and are expected to increase further. In fact, trading volume is also expected to go up high.
Source: Coin Metrics’ Market Data Feed
Furthermore, the instability and volatility in coins such as BTC and ETH is a major factor behind the rise of stablecoins. When BTC dropped 8.34% on 4 December 2021, USD Coin was sailing smoothly as a safe haven.
Not everyone in the crypto-sphere is a fan of stablecoins, however. For
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