The stablecoin market has grown by almost 300% since the beginning of the year

Investors’ interest in “stable” cryptocurrencies can be explained by the desire to hedge risks during periods of destabilization of the financial market.

The valuation of all issued stablecoins exceeded $ 20 billion. The total growth since the beginning of the year is almost 300%. Interest in “stable” digital tokens may reflect attempts by investors to hedge the risks of investing in traditional assets and classic cryptocurrencies amid the coronavirus pandemic. CoinDesk writes about it.

The valuation of the stablecoin market has doubled in 4 months. Back in May 2020, the indicator stood at $ 10 billion. At the same time, statistics indicate that the active growth of the stablecoin market began in the spring of 2020 – against the backdrop of a pandemic and destabilization of the economy.

A chart that reflects the valuation of the stablecoins released to the market. Data: Coinmetrics


The head of the research department of TradeBlock, John Todaro, believes that another driver of growing interest in stablecoins in 2020, which is the decline in prices for classic cryptocurrencies, the rate of which is not tied to other assets. For example, in March, bitcoin fell to $ 5.1 thousand. Many cryptocurrencies followed BTC. In an attempt to avoid risks, investors began selling volatile assets and transferring funds to stablecoins.

Bitcoin charts. Data: CoinMarketCap


John Todaro also noted that it is not possible to transfer classic cryptocurrency to fiat on many digital asset exchanges to hedge risks in unstable periods. Stablecoins, in his opinion, were the solution to this problem. The surge of interest in the most common “stable” digital asset – Tether – in the spring of 2020 can be seen as an illustration of the growing interest of investors in the instrument under discussion during periods of market destabilization.

A graph that reflects the total amount of Tether on the exchanges. Data: GlassNode

We will remind, earlier experts of the European Central Bank came to the conclusion that the generally accepted concept of “stablecoin” needs to be revised.

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