There is now over $10 billion worth of stablecoin assets in circulation. Cryptocurrency traders appear to be increasingly choosing stablecoins as the digital currency for their exchange activity.
As per data from Coin Metrics and a report by CoinDesk, stablecoin assets in circulation grew in volume by 70% over two months with much of the increase attributed to the stablecoin tether. CoinGecko says the largest centres of tether trading activity are the cryptocurrency exchanges Binance and Huobi, both based in Asia and both offering hundreds of cryptocurrency trading options.
In the past, cryptocurrency traders had mostly used bitcoin as their base trading currency to exchange for a myriad of other cryptocurrencies. Ether has also been a popular cryptocurrency of choice to price other tokens. However, in the last two years, that trend has changed to traders using stablecoins to trade against altcoins.
Stablecoins have been created to give cryptocurrency users a less volatile asset. They could open up cryptocurrency usage to a broader audience by providing a coin with more price stability that can be used more reliably to purchase goods and services. At Bitcoin’s peak in 2017, its volatility likely deterred retail and mainstream consumer markets from widespread adoption.
Tether, like certain other stablecoins, is backed by USD reserves. BitMEX head of business development Greg Dwyer says it has noticed that “traders prefer to trade pairs with USD-like denominations as dominance for altcoin trading.” And Binance CEO, Catherine Coley, says traders now “think in dollars and trade with stablecoins.”
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