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– TIMESTAMPS –
2:19 What Are Stablecoins?
4:56 Recent Stablecoin Printing
7:08 Stablecoin Volatility
8:40 Why Print Stablecoins?
11:04 Stablecoin Manipulation!?
14:04 Stablecoin vs. Governments
17:37 Stablecoin Concerns
20:30 Final Thoughts
⛓️ 🔗 Useful Links 🔗 ⛓️
► Stablecoin Market Cap: https://messari.io/chart/stablecoin-market-cap-47A96D06
► Blockchain Research x University of Hamburg Stablecoin Study: https://www.blockchainresearchlab.org/2020/06/24/how-do-stablecoin-issuances-affect-cryptocurrency-markets/
► VOXEU Stablecoin Study: https://voxeu.org/article/stable-coins-dont-inflate-crypto-markets
► EU Stablecoin Legislation: https://cointelegraph.com/news/chasing-the-hottest-trends-in-crypto-the-eu-works-to-rein-in-stablecoins-and-defi
► Circle Freezes USDC Account: https://cointelegraph.com/news/centre-freezes-ethereum-address-holding-100k-usdc
► Stablecoin Printer Tracker: https://twitter.com/usdcoinprinter?lang=en
❓What Are Stablecoins ❓
Stablecoins are cryptocurrencies whose values are pegged to a more stable asset such as the US dollar. There are also stablecoins pegged to denominations of precious metals like gold.
Stablecoins have been controversial. Many in the crypto community believe that stablecoins have been used to manipulate Bitcoin’s price. Both Tether and USDC work closely with law enforcement and have a history of freezing wallet addresses which were suspected of being involved in criminal activities.
You’d also be hard pressed to find a single stablecoin which has maintained a perfect peg during times of high volatility. Despite these concerns, stablecoin share of the overall market cap of the crypto space has been growing exponentially over the past year.
🖨Recent Stablecoin Printing🖨
The market cap of the 8 largest stablecoins has grown from 5 billion to over 22 billion over the last 6 months. Most of this growth has come from Tether, which went from a market cap of 4.5 billion to nearly 17 billion during this period.
There appear to be two distinct surges in stablecoin printing over the last 6 months. The first wave of stablecoin printing seems to have begun after that flash crash in March and continued until early July.
When demand of stablecoins is high, clever traders can sometimes sell a stablecoin for slightly more than its peg. This is because people want stablecoins so badly that they are willing to pay a small premium to protect against further losses in the cryptocurrency they are desperately trying to sell.
The opposite happens when demand for stablecoins falls. If everyone is trying to sell their stablecoins at the same time to buy into Bitcoin or another cryptocurrency, the sudden flood of supply can drive prices slightly below the 1 dollar peg they are supposed to hold.
There doesn’t appear to be any tangible evidence that stablecoins can be used to inflate the cryptocurrency market. This is all comes down to another factor which separates stablecoins from the fiat they are pegged to: redeemability.
The two largest stablecoin issuers, Tether and USDC, actually allow you to redeem your tokens for real US dollars. If the price of USDC was to drop significantly due to a sudden spike in supply, this means that someone could buy up a bunch of USDC at a discount, go over to Circle’s website, and demand their 1-dollar peg.
As such, the amount stablecoins you see in circulation are, in theory, necessary. Stablecoin supply is fundamentally an indicator of demand for cryptocurrencies as a whole and not an indicator of market manipulation.
Stablecoins make US dollars readily accessible to anyone with an internet connection. This threatens the stability of foreign currencies because the moment they start to lose value, their citizens can easily accelerate that devaluation by selling their native currencies for US dollars. In a worst-case scenario, this could completely tank another national currency, making the affected country’s economy heavily dependent on US monetary policy.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.
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