• Latest
Stablecoins Reign Among Top Coins: Why and What It Might Mean

Stablecoins Reign Among Top Coins: Why and What It Might Mean

August 10, 2021
ygg sea surpasses 10,000 scholarships in just six months of launch

YGG SEA Surpasses 10,000 Scholarships in Just Six Months of Launch

May 6, 2022
mintable launches industry changing gas free minting service on ethereum

Mintable Launches Industry Changing Gas Free Minting Service on Ethereum

May 1, 2022
5 projects enabling smart contract development on bitcoin

5 Projects Enabling Smart Contract Development on Bitcoin

April 29, 2022
bitcoin atm installed in mexico's senate building

Bitcoin ATM installed in Mexico’s Senate Building

April 27, 2022
cross chain services play a crucial role in facilitating continued adoption of defi applications

Cross-Chain Services Play a Crucial Role in Facilitating Continued Adoption of DeFi Applications

April 26, 2022
justin sun launches usdd, integrating the blockchain world and the real world with the decentralized stablecoin

Justin Sun Launches USDD, Integrating the Blockchain World and the Real World with the Decentralized Stablecoin

April 25, 2022
nfts: the next musical revolution

NFTs: The Next Musical Revolution

April 24, 2022
things you should know before investing in nfts

Things You Should Know Before Investing in NFTs

April 24, 2022
what are wrapped tokens?

What Are Wrapped Tokens?

April 23, 2022
what is the future of ethereum (eth)?

What is the future of Ethereum (ETH)?

April 22, 2022
green gaming

Everything You Need to Know About Play-to-Earn on Algorand in 2022

April 21, 2022
$ape going bananas as rumors of upcoming land sale of bayc metaverse gather momentum

$APE Going Bananas As Rumors of Upcoming Land Sale of BAYC Metaverse Gather Momentum

April 21, 2022
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
CoinNewsDaily
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
CoinNewsDaily
No Result
View All Result
Home Business

Stablecoins Reign Among Top Coins: Why and What It Might Mean

coinnewsdaily by coinnewsdaily
August 10, 2021
in Business
0
Stablecoins Reign Among Top Coins: Why and What It Might Mean
190
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

Stablecoins Reign Among Top Coins: Why and What It Might Mean 101
Source: Adobe/Barry Sherbeck

Stablecoins, stablecoins, stablecoins. The cryptouniverse can’t seem to get enough of them, as evidenced by the fact that Binance USD (BUSD), a cryptocurrency with a market capitalization of less than $1 billion, cracked the top ten of the cryptocurrency market earlier this summer. Since then, it has been in and out of the club and is currently ranked 11th.

Related articles

ygg sea surpasses 10,000 scholarships in just six months of launch

YGG SEA Surpasses 10,000 Scholarships in Just Six Months of Launch

May 6, 2022
5 projects enabling smart contract development on bitcoin

5 Projects Enabling Smart Contract Development on Bitcoin

April 29, 2022

However, BUSD’s inclusion in the top ten meant that the latter now included three stablecoins, with the other two being Tether (USDT) and USD Coin (USDC), respectively. At the time of writing, these three tokens have a combined market capitalization of USD 101.9 billion, and their combined 24-hour volumes consistently outpace the combined 24-hour volumes of the remaining top ten cryptocurrency assets.

As a result, there could be some risks for the market, with analysts speaking to CoinNewsDaily agreeing that prices would drop across the board if something happened to one or more of the three major stablecoins (e.g., regulation, legal action). But most believe that the market will recover from any stablecoin-induced crash and that newer stablecoins will emerge to take the place of any that have failed so far.

The growth of stablecoins

To put this in context, the USDT, USDC, and BUSD were collectively valued at USD 26 billion on January 1. This indicates that their combined capitalization has increased by 292 percent since the beginning of the year, which is comparable to the percentage increase (270 percent) in the price of bitcoin (BTC) over the previous 12 months.

But why would anyone want to issue stablecoins that are pegged to the US dollar in the first place?

“They exist because they are more flexible than fiat currencies and can move on the blockchain, providing nearly instant settlement for deposits, withdrawals and transactions. In contrast, moving fiat around is not as seamless and traders would need to use banking services for every deposit and withdrawal,” said Hunain Naseer, a senior editor at OKEx Insights.

Others in the industry agree with this assessment, with CoinShares’ Christopher Bendiksen telling CoinNewsDaily that the three largest stablecoins have grown in popularity for a variety of reasons.

“First of all, they are immensely superior to fiat money for cross-exchange arbitrage, making them highly popular with trading desks who require rapid settlement. I suspect this is their primary use case: stablecoins can be settled in a matter of hours whereas regular fiat takes days at best,” he said.

Another argument advanced by Bendiksen is that stablecoins enable people in authoritarian countries to obtain dollars, with China and Turkey being the most prominent examples.

“Thirdly, they enable crypto exchanges to operate without the same need for risky and costly banking relationships as is normally necessary,” he added.

To put it another way, because so much of the cryptocurrency market and ecosystem is unregulated, the demand for stablecoins has grown in tandem with the growth of the industry.

More specifically, some commentators attribute the meteoric rise of stablecoins to the cryptocurrency exchange Binance, which is a major player in the industry.

“Most of the world’s crypto trading is carried out on Binance, using tether as the base currency to move in and out of different cryptos. Tether, of course, is widely known to be an extremely unsafe asset to park money in, but that hasn’t stopped millions of people from using it, including — sometimes — myself,” said Glen Goodman, an analyst and author of the bestselling book The Crypto Trader.

Goodman noted that most liquid, widely traded currency pairs are USDT pairs. “It’s quite hard to avoid using it if you want to utilize the world’s most liquid crypto markets.”

Potential risks

Meanwhile, crypto skeptics such as author David Gerard continue to argue that market manipulation is the driving force behind the rapid expansion of stablecoins, bringing the never-ending debate about the backing of these tokens back to the forefront of our minds.

The ‘commercial paper’ used by Tether cannot be US commercial paper, or else everyone in the US commercial paper market would have been aware of Tether’s presence in the market. They won’t say what it is, strongly implying that confidence would be harmed if the public found out,” Gerard explained, adding that the other two major stablecoins are experiencing similar difficulties.

Goodman, on the other hand, believes that “Tether is possibly the greatest risk to the health of the cryptocurrency market, because it is largely backed by volatile investments.”

“If the stock and crypto markets crashed simultaneously (as they did in March 2020), and there was a run on USDT where lots of people tried to cash in their USDT for dollars simultaneously, it is quite possible that there wouldn’t be enough asset-backing to pay people 1 dollar for each tether,” he said.

Suppose the USDT was not sufficiently backed, Goodman believes that this would cause a panic and the value of the USDT would plummet.
As a result, the prices of virtually every major cryptoasset would plummet as a result of this.

“As the cryptocurrency with the largest market capitalization, USDT has a significant impact on the market, and regulatory challenges do present risks.
It is possible that prices will plummet across the board in the event of a collapse,” Hunain Naseer warned.

In the opinion of Christopher Bendiksen, the consequences of a financial collapse or a fatal regulatory or legal challenge would be immediate and severe, but they would not necessarily be long-lasting.

“I’m sure the overall market would suffer if one or more of them were to collapse, but it would be a temporary setback. Bitcoin does not need stablecoins to operate, and even though the loss of liquidity would be negative, I highly doubt it would present any existential problems for the industry at large,” he said.

The future, alternatives, and regulation

Bendiksen went on to say that decentralized alternatives would eventually emerge to take the place of any stablecoins that were no longer in existence.
David Gerard, on the other hand, believes that they are more or less required to emerge if the market is to continue to grow.

“New stablecoins will emerge as the old ones are forced to cease operations for a variety of reasons. Since May, for unknown reasons, tether issuance has been suspended, causing USDC and BUSD issuance to soar like rockets,” he explained.

Stablecoins, on the other hand, may eventually clean up their act, assuming that regulation is enacted that restricts their worst effects while still allowing for legitimate applications.

“As a general trend, I believe increased regulation acts like an evolutionary selective pressure on cryptoassets, favouring increasingly robust and antifragile solutions to any product which is desired by the market,” said Christopher Bendiksen.

Similarly, Glen Goodman pointed out that US Treasury Secretary Janet Yellen’s recent call for regulators to “act quickly” on stablecoins could ultimately be beneficial to the sector as a whole.

“If this is done in a sensible manner, it may even serve to encourage their use,” he said in his conclusion. In order to regulate effectively without suffocating innovation, regulators must fine-tune their response.

Tags: BUSDCBDCCrypto BusinessCurrencystablecoinstablecoinsTetherUSDUSDCUSDT
Share76Tweet48
Previous Post

Top 5 cryptocurrencies to watch this week: BTC, LTC, ICP, THETA, FTT

Next Post

SEC wants ‘terabytes’ of Slack communications from Ripple

coinnewsdaily

coinnewsdaily

CoinNewsDaily.com is an online Crypto Coin News Website that aims to provide latest trendy news from market and around the world.

Related Posts

ygg sea surpasses 10,000 scholarships in just six months of launch
Alt Coin

YGG SEA Surpasses 10,000 Scholarships in Just Six Months of Launch

May 6, 2022
5 projects enabling smart contract development on bitcoin
Alt Coin

5 Projects Enabling Smart Contract Development on Bitcoin

April 29, 2022
cross chain services play a crucial role in facilitating continued adoption of defi applications
Alt Coin

Cross-Chain Services Play a Crucial Role in Facilitating Continued Adoption of DeFi Applications

April 26, 2022
justin sun launches usdd, integrating the blockchain world and the real world with the decentralized stablecoin
Alt Coin

Justin Sun Launches USDD, Integrating the Blockchain World and the Real World with the Decentralized Stablecoin

April 25, 2022
what are wrapped tokens?
Bitcoin

What Are Wrapped Tokens?

April 23, 2022
what is the future of ethereum (eth)?
Alt Coin

What is the future of Ethereum (ETH)?

April 22, 2022
Load More
Next Post
SEC wants ‘terabytes’ of Slack communications from Ripple

SEC wants ‘terabytes’ of Slack communications from Ripple

Categories

  • Alt Coin
  • Bitcoin
  • Business
  • Ethereum
  • ICO
  • Litecoin
  • Mining
  • NFT
  • Ripple
  • Tech
  • Trading

What New here?

  • YGG SEA Surpasses 10,000 Scholarships in Just Six Months of Launch
  • Mintable Launches Industry Changing Gas Free Minting Service on Ethereum
  • 5 Projects Enabling Smart Contract Development on Bitcoin

Subscribe to Get More!

Loading
  • About Us
  • Contact Us
  • Privacy & Policy

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev

No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev

  • bitcoinBitcoin(BTC)$23,072.00-0.54%
  • ethereumEthereum(ETH)$1,700.67-0.67%
  • tetherTether(USDT)$1.000.09%
  • binancecoinBNB(BNB)$322.392.19%
  • rippleXRP(XRP)$0.374222-0.42%
  • cardanoCardano(ADA)$0.52-0.60%
  • SolanaSolana(SOL)$40.40-0.01%
  • polkadotPolkadot(DOT)$8.56-1.63%
  • dogecoinDogecoin(DOGE)$0.069111-1.13%
  • Shiba InuShiba Inu(SHIB)$0.000012-0.50%
  • daiDai(DAI)$1.000.04%
  • matic-networkPolygon(MATIC)$0.91-0.44%
  • tronTRON(TRX)$0.070026-0.22%
  • ethereum-classicEthereum Classic(ETC)$38.281.47%
  • OKBOKB(OKB)$18.24-1.37%
  • leo-tokenLEO Token(LEO)$4.90-0.61%
  • litecoinLitecoin(LTC)$61.37-0.04%
  • FTXFTX(FTT)$30.62-0.15%
  • CronosCronos(CRO)$0.1467730.74%
  • chainlinkChainlink(LINK)$7.85-0.52%
  • cosmosCosmos Hub(ATOM)$11.365.47%
  • stellarStellar(XLM)$0.1229461.55%
  • moneroMonero(XMR)$169.314.03%
  • bitcoin-cashBitcoin Cash(BCH)$141.870.37%
  • algorandAlgorand(ALGO)$0.3653763.32%
  • vechainVeChain(VET)$0.031381-0.77%
  • filecoinFilecoin(FIL)$8.88-4.26%
  • Internet ComputerInternet Computer(ICP)$8.17-2.00%
  • tezosTezos(XTZ)$1.911.35%
  • theta-tokenTheta Network(THETA)$1.665.55%
  • ElrondElrond(EGLD)$66.330.34%
  • AaveAave(AAVE)$101.650.94%
  • eosEOS(EOS)$1.24-0.55%
  • bitcoin-cash-svBitcoin SV(BSV)$62.340.57%
  • makerMaker(MKR)$1,123.151.26%
  • iotaIOTA(MIOTA)$0.3478090.66%
  • havvenSynthetix Network(SNX)$4.100.31%
  • zcashZcash(ZEC)$72.326.96%
  • paxos-standardPax Dollar(USDP)$1.00-0.07%
  • neoNEO(NEO)$11.49-0.98%
  • huobi-tokenHuobi(HT)$4.37-0.21%
  • zilliqaZilliqa(ZIL)$0.045517-2.41%
  • basic-attention-tokenBasic Attention(BAT)$0.431016-3.28%
  • PancakeSwapPancakeSwap(CAKE)$4.436.26%
  • wavesWaves(WAVES)$6.07-2.47%
  • KusamaKusama(KSM)$65.67-2.89%
  • dashDash(DASH)$54.092.43%
  • bitcoin-goldBitcoin Gold(BTG)$29.18-1.21%
  • nemNEM(XEM)$0.051878-1.97%
  • CompoundCompound(COMP)$63.152.15%
  • qtumQtum(QTUM)$4.14-0.97%
  • yearn-financeyearn.finance(YFI)$11,378.66-4.16%
  • Elrond ERDElrond ERD(ERD)$0.0259290.00%
  • omisegoOMG Network(OMG)$2.33-1.70%
  • ethlendAave [OLD](LEND)$4.103.48%
  • SushiSushi(SUSHI)$1.50-1.42%
  • golemGolem(GLM)$0.272131-0.52%
  • ontologyOntology(ONT)$0.288363-1.12%
  • umaUMA(UMA)$3.02-0.58%
  • digibyteDigiByte(DGB)$0.012349-0.34%
  • UniswapUniswap(UNI)$2.4438.80%