Stablecoins Soar in Value as Everything Else in Crypto Shrinks

The hottest spot in crypto right now is coins with prices that don't move. From a report: Stablecoins, cryptocurrencies which peg their value to assets such as the U.S. dollar, have ballooned in size over the past few months as Bitcoin and other coins whipsaw. The total market capitalization of stablecoins currently stands around $180 billion, up from roughly $38 billion a year ago, Coin Metrics data compiled by The Block show. By comparison, the total crypto universe is largely stagnant over the past year. The surge in market value shows that crypto traders are effectively moving their holdings to cash, according to James Malcolm of UBS. Bitcoin prices have collapsed by about 50% since mid-November, with many smaller coins posting even bigger declines. Rather than moving money off crypto-trading exchanges by converting back into fiat currencies -- a cumbersome and potentially costly process -- it's easier for investors to simply wait out the volatility in stablecoins, Malcolm said.

Stablecoins

[Anonymous Coward]

should be stable, not soaring in value.

Re:

[Admiral Krunch]

should be stable, not soaring in value.

They probably mean relative to the free falling cryptos...

Weren't cryptos supposed to be the cure for this kind of problem? War and inflation etc, is supposed to make them worth more...oops.

'Stablecoins Soar in Value'

[Fly Swatter]

So the main feature doesn't work. Wait until they sink in Value and suddenly all the holders will be like WTF.

Re:'Stablecoins Soar in Value'

[chill]

It is a poor headline. In this case "soar in value" means more people using them or their total market capitalization. Individual coins are still 1==1.

Re:

[Valgrus Thunderaxe]

Then that's what the headline should say, rather than the exact opposite as it does now.

Re:

[splutty]

But that wouldn't be pushing crypto properly!

Re:'Stablecoins Soar in Value'

[Brain-Fu]

Slashdot editors face many challenges, but perfectionism has never been among them.

Re:

[avandesande]

Yelling at the dupe checking team takes up most of their time.

Re:

[splutty]

Plus they're supposed to be backed by actual assets, which if they 'soar' is going to be very very problematic.

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[hdyoung]

I simply don't believe it they are backed by stable assets. Simply don't believe it. People inside that ecosystem who want to sell you stablecoins will assure you that totally, for realizes, absolute pinky-swear, each stablecoin is backed by a dollar of real asset. There are lots of websites that will assure you that as well. But the FTC says otherwise. And, when you ask someone to actually show proof, you're presented with an impressive display of logics gymnastics and techno-jargon. What you WONT see is

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[splutty]

Thanks for making me chuckle :) Spot on. And I was trying to be nice about it!

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[timeOday]

I wouldn't consider any deposit secure unless it is backed by the FDIC. This isn't some theoretical thing that only happened in the 1930's either, in 2008 the gov. took a substantial role in backing or bailing out failing banks.

https://www.fdic.gov/bank/hist... [fdic.gov]

I think a Starbucks Gift Card is more stable than stablecoin - who's more likely to go out of business, Starbucks or Tether?

HODL becomes GTFO

[infrinjin]

When a few too many folks try to convert stablecoins to currency, the corporate bonds will fail, and everyone burns. This will not end any other way.

It is also truly terrifying that pension funds, public companies, etc are buying into this.

There is no math trick on a distributed hash chain based ledger that can save people from their own stupidity.

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[hey!]

You don't need anything like a dollar on hand for every dollar's worth of cryptocurrency to peg the value of that currency to the dollar, you just need to have enough dollars on hand to cover immediate demands. If that demand grows too quickly, however, it's like a run on the bank and the system will collapse.

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[infrinjin]

You don't need anything like a dollar on hand for every dollar's worth of cryptocurrency to peg the value of that currency to the dollar, you just need to have enough dollars on hand to cover immediate demands. If that demand grows too quickly, however, it's like a run on the bank and the system will collapse.

Is this comment meant to educate me or for others?

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[hey!]

I wouldn't presume to educate you. I'm just disagreeing with one of the assumptions of the comment.

Re:

[ceoyoyo]

If only a bunch of private entities had issued their own fractionally-backed currencies in the past, we could study them to see what happened.

Crypto pegged to a fiat currency?

[Larsen E Whipsnade]

Okey....

Seriously, though. It's worth a shot.

We may be approaching a time when using cigarettes as currency is worth a shot.

Re:

[ink]

CigCoin

It's way more "stable" than Stablecoin. Get in before the :rocket: :moon:

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[alvinrod]

We may be approaching a time when using cigarettes as currency is worth a shot.

So basically prison?

You Keep Using That Word

[Thelasko]

Pegging a coin the the U.S. dollar and calling it "stable" makes the bold assumption the dollar is stable. [wikipedia.org]

If cryptocurrency is technically superior to fiat currency, it should aim to be more stable than the USD. I think it's possible, but the cryptocurrency industry just needs to aim higher.

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[Junta]

stable is a relative term and so far no one has completely nailed it, however major nation currencies have come the closest.

In this case, people keep pointing to the inflation in the current situation as some failure of the currency. Except that we have endured real impacts to supply chains that make a lot of things more scarce and so inflation is modeling that.

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[ink]

Precisely. The mark of a good currency is its endurance over time.

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[ceoyoyo]

Well, it's a hell of a lot more stable than any cryptocurrency.

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[Thelasko]

Well, it's a hell of a lot more stable than any cryptocurrency.

The bar is low.

Stable coin backing - no auditing

[FeelGood314]

Most of the stable coins have zero transparency and have never been independently audited. Worse a few of them just took the money and bought bitcoin. Many theorize the latest rise in bitcoin was mostly driven by this printing of stable coins to buy bitcoin. The trouble obviously is that selling bitcoin to prop up stable coins would cause the price of bitcoin to drop below the price the stable coins bought them at. People will only hold crypto currencies for speculative reasons while interest rates are near zero. Once interest rates rise people will want to pay off their debts to avoid interest payments and much of the speculative money will leave the system....or at least that's what I assumed back in January 2021 when I sold the last of my crypto currency so what do I know.

Strange, no?

[bradley13]

This seems counterintuitive. I mean, I can understand people fleeing currencies that they fear may crash. I wouldn't want to be holding any rubles just now. But *all* currencies worldwide are in danger, some more than others. Stablecoins will be just as affected

I expected to see Bitcoin&Co shoot through the roof with this crisis. But then, the crypto scene has never been logical...

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[infrinjin]

I expected to see Bitcoin&Co shoot through the roof with this crisis. But then, the crypto scene has never been logical...

All of those Russian oligarchs are probably too dumb to see that now is the time to exchange their rubles for something even more worthless.

That's OK more bored apes for us muricans!

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[Admiral Krunch]

This seems counterintuitive. I mean, I can understand people fleeing currencies that they fear may crash. I wouldn't want to be holding any rubles just now. But *all* currencies worldwide are in danger, some more than others. Stablecoins will be just as affected

I expected to see Bitcoin&Co shoot through the roof with this crisis. But then, the crypto scene has never been logical...

That was the coin bro promise.

The actual holders of the coins have other ideas though, and are busy looking for the greater fools.

Remember this is with the extra added demand by Russians looking to get past banking restrictions too.

But wait!

[wakeboarder]

Crypto was supposed to be a hedge against inflation and an alternative to gold, what happened?

Re:

[ceoyoyo]

A handful of Internet crypto-enthusiasts didn't have a good enough understanding of economics to predict the future?

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[Junta]

That must be a gigantic hand...

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[ceoyoyo]

Depends on how many people you think Satoshi was.

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[Junta]

Oh, you were talking about the designers. I thought you meant the rabid fanbase, which is obnoxiously large (large enough to drive crazy valuation, not large enough to actually achieve what they imagine)

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[ceoyoyo]

The fanbase might pay a bit of lip service to crypto "currency", but they really treat it as a speculative asset: HODL, "to the moon," even dropping "currency" from the name. Bitcoin boosters don't want a stable store of value.

Satoshi is either running the greatest pyramid scheme in history, just waiting to cash out, or they were genuinely trying to create a useful currency. If the latter, they've failed pretty spectacularly, for reasons an 18th century mercantilist or someone who lived through the great de

Re:

[wakeboarder]

The problem I see is the crypto 'dudes' have to come up with a new reason to buy crypto every few months. No one on the planet can predict what crypto's value is (with the execption of stable coins, in that case why not have a bank account? there are probably less transaction fees). Here is a more comprehensive list:

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[ceoyoyo]

with the execption of stable coins, in that case why not have a bank account?

It's because of the cheap and quick electronic transactions... no wait, that's not it. Well, maybe in the US. It apparently costs a lot of money to do electronic bank transfers there?

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[Lisandro]

This happened: https://twitter.com/DavidIngle... [twitter.com]

Re:

[Admiral Krunch]

So what happens when all of the stablecoin investors want to cash out for real money all at once? Oh yeah, about your money...

They all have clauses in their contracts stating they can wait and pay you back 'later'.

Over and over

[Mazzachre]

This is a cycle we will see repeated over and over. Basically a few have gathered up a whole bunch in gains and are now waiting it out while the people who ended up with the hot potato is losing everything. Usually smaller investors and private people who bought into the lottery. Crypto is essentially a large pyramid/Ponzi scheme and it needs to be reset every once in a while, stymying the idiots that paid their money to the smart schemers, before it goes back in full swing trying to find more idiots to pay

No Stablecoin for me

[biggaijin]

I've decided to focus my investment strategy entirely on tulips.