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What is behind the unprecedented influx of stablecoins into the market?

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What is behind the unprecedented influx of stablecoins into the market?

What is behind the unprecedented influx of stablecoins into the market?
CONTENT

  • The crypto market is flooded with an unprecedented number of new stablecoins.

  • Tether has issued over $ 1 billion USDT in less than a month.

  • Members of the crypto community explain this trend in different ways..

International consortium of news organizations developing transparency standards.

Over the past two months, the crypto market has registered a powerful influx of new stablecoins. This has led to the emergence of various theories to explain this trend..

What is behind the unprecedented influx of stablecoins into the market?

Recently, even ordinary members of the crypto community could not help but pay attention to the aggressive minting of new stablecoins. For example, Tether alone has issued over $ 1 billion USDT coins in the last 25 days, which is equivalent to about $ 40 million per day. BUSD and the Binance team have stepped up their emissions.

This could not fail to make many participants in the cryptoindustry wonder: what is behind such a sudden increase in activity?

Who needs stablecoins?

What do we know at the moment? Firstly, the volume of USDT coins stored on crypto exchanges recently broke all historical records, reaching a new high. At the moment, this figure is over $ 1.6 billion, and, most likely, exchanges will continue to build up these reserves, despite growing doubts about the provision of all these USDT with US dollars..

However, even such insatiable demand for USDT is only part of the puzzle and cannot fully explain the whole hype around stablecoins. In this regard, cryptocurrency analyst Cole Garner recently drew the attention of his readers to several more important factors..

What is behind the unprecedented influx of stablecoins into the market?

In particular, he recalled the possible influence of China. Indeed, it is known that it is with the help of stablecoins that wealthy investors from the Middle Kingdom are trying to bypass internal restrictions and capital controls with the help. For them, buying USDT on OTC platforms is often practically the only way to access the cryptocurrency market..

In addition, the analyst believes that institutional investors can play their role, trying to secure their investments in the event of a new decline in the cryptocurrency market..

And finally, the inflow of funds into stablecoins may reflect the general indecision of crypto investors in the face of increased volatility and uncertainty in the market. Accordingly, they withdraw investments from bitcoin by observing the market situation. In the meantime, they accumulate their funds in stablecoins as currencies with a more stable value pegged to traditional assets..

This indirectly confirms the fact that now Bitcoin (BTC), which previously traditionally correlated with the new emissions of Tether, has now severed this connection..

Skeptics remind …

However, skeptics continue to remind that stablecoins are not a panacea and a refuge from instability in the crypto market. This is especially true of the Tether (USDT) project, which has repeatedly found itself in the epicenter of scandals and criticism, including for the company’s opaque policy and its secrecy from audits..

As a reminder, in the fall of 2019, Tether co-founder William Quigley generally suggested that it really doesn’t matter if all the coins issued are actually 100% backed by US dollars. The main thing is that investors “believe” in this, he said..

If we look at the situation from this angle, then we can, as an alternative version, assume that aggressive injection of stablecoins is the last desperate attempt to keep the cryptocurrency market afloat. Well, in this case, everything secret will inevitably become apparent.

What is behind the unprecedented influx of stablecoins into the market?

What do you personally consider to be the main driver of the current surge in stablecoin emissions? Share your opinion in the comments!

Disclaimer

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