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- Stablecoins show strength as the US Dollar weakens due to macro economic factors.
- Tether strongest of all, as others depegged mid-March.
Stablecoins grow stronger as the US Dollar displays weak signals due to several factors in the macro economy. The weakening of the US Dollar is attributed to the recent injection made by the Federal authorities to ease the crunch caused by the recent banking sector turmoil. The Federal authorities announced to inject $2 trillion funds under the emergency loan program, after banks melted down.
Stablecoins Win the Race
With the bulk injection of funds worth $2 trillion, the supply of US dollars is most likely to increase manifolds. The raised supply will negatively affect the valuation of the US dollar, making it weaker. On the other hand, this might be a boon for cryptocurrencies, especially for the stablecoins. Stablecoins are likely to be the first cryptos to be adopted if crypto is legalized and incorporated into the economy.
With economic factors working their charm, Stablecoins use the weak US dollar to its benefit and display a positive momentum for the watchers looking for a switch. The major factor that gives stablecoins an upper hand, is the proper process to maintain its supply.
Tether Tops the List
Some stablecoins witnessed a drop in their values as they were depegged mid-march. The depegging trend in stablecoins brought out Tether as the strongest. USDT rose while other stablecoins were depegging. The depegging was attributed to the Silicon Valley Bank and the liquidity crunch caused by the collapse, as majority of them are fiat-pegged. All stablecoins witnessed depegging except for Tether, as it marked a rise of about 10% while others fell by more than 5%.
Overall, stablecoins displayed strong signals amid falling markets and devaluing US dollar. They present a new era of digital currency, displaying signs of both a medium of exchange and an investment. The protocol on which Tether is built, provides it a stronger foundation for it to jump up. USDT are pegged at 1-to-1 with matching fiat currency and backed 100% by Tether’s reserves. At press time, USDT in Tether has a reserve of more than $80 billion.
USDT manages to remain stable
USDT jumped by more than 10% while other stablecoins were depgging due to the exposure to Silicon Valley Bank meltdown. The rise was immediately followed by a correction to maintain its value at $1. Since then the value has remained static, near about $1. The stability in the value of USDT and its confirmation to non-exposure to Silicon Valley Bank collapse made it rise while others faced the aftermath of the collapse. The volume, although remains highly volatile keeping the price nearly $1.
Conclusion
Stablecoins show great potential in terms of scope of adoption of cryptocurrencies. A weakening greenback is a good sign for stablecoins. Amid the banking crisis and a weakening dollar, Tether proved to be the strongest of all, displaying positive attributes. While USDT surged several other stablecoins were being depegged
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
