Bitcoin and many other altcoins haven’t been doing too well as of late. These currencies are dropping and shedding value faster than anyone could have anticipated. However, their falls have given rise to stable coins, which have ultimately taken the spotlight over the course of the past week or so.
Stable Coins Are Growing Like Mad
Stable coins are digital assets with value that doesn’t move. This is because they are tied to fiat currencies like the U.S. dollar. When this happens, their value is “stable,” as their names suggest. These currencies have become quite popular in recent years, but now that bitcoin and other major digital assets are experiencing rather harsh times, it looks like stable coins are beginning to earn a lot more prominence amongst traders.
At the time of writing, stable coins have a market valuation of more than $180 billion. True, these assets don’t even come close to bitcoin in that sense, but they certainly give everyone a sense of security. This number is up more than $38 billion from just a few years ago, and the world of stable coins is growing fast. James Malcolm of UBS fame explained in an interview that waiting out bitcoin’s volatility with stable coins is a smart and easy route to take. He said:
There’s risk aversion, which creates flight to relative safety. You park your money temporarily without taking it out of the ecosystem, and all the cost and hassle that involves.
There are many items occurring in the United States and abroad right now that are potentially causing bitcoin’s value to decrease. The primary aspect is the tension between Russia and Ukraine. With the world on the brink of war, it seems like bitcoin is facing the pressure and cannot keep up. We are seeing in regions of Ukraine, for example, that citizens are turning to gold and other traditional refuges in lieu of digital assets as a means of avoiding risk.
In addition, the Federal Reserve has announced that it will be unveiling tighter financial policies in the coming weeks and months. This could wind up weighing down traders even further.
Among the biggest and most common stable coins in existence right now is Tether. While the asset has come with its fair share of controversy, the valuation of Tether stands at $47 billion at press time. This is huge considering the currency was just under $6 billion about a year ago. In roughly 12 months, the currency has grown by nearly eight times.
How Big Is Tether, Exactly?
In a report, Arcane Research wrote:
If USDC and USDT continue growing at similar rates as so far in 2022, USDC will become the largest stable coin by market cap at the end of June.
The establishment of stable coins has caused several more regulators to call for action in the growing cryptocurrency industry.