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    How Do Stablecoins Behave During Corona Time?

    stablecoin new record high
    During this widespread chaos, the stablecoin market shows strong growth. While most cryptocurrencies have experienced a decrease in market capitalization this month, stablecoins are just about to celebrate a victory – the collapse of the cryptocurrency market affected them the least.

    Recently, the volume of assets parked in stablecoins has significantly increased in the crypto market. This indicates a strong hesitation of investors.

    The benefits offered by dollar-linked digital assets have indeed become particularly evident in the context of the coronavirus pandemic. Recently, the authorities of several countries, including China, Iran, and Hungary, were seriously alarmed by the threat of infection of citizens through paper bills.

    There is a high level of volatility and uncertainty on world markets, and it has covered not only stocks and raw materials, but also the cryptocurrency market. In this context, there has been a noticeable influx of capital into stablecoins, which caused great doubt and indecision among investors.

    The total market capitalization of all stablecoins has recently reached a new record high and exceeded $7 billion. This may indicate that investors lost their positions on the volatile and disappointing Bitcoin, Ethereum, and other cryptocurrencies – at the same time, they still were not ready to completely say goodbye to the cryptocurrency market.

    The economy is sagging — stablecoins are getting stronger

    Recent weeks have been difficult for traders, no matter what they trade. World stocks, oil, gold, Bitcoin – all assets were thrown up and down, as the destructive consequences of the coronavirus pandemic for the world economy became increasingly apparent.

    Meanwhile, among all this chaos, this market segment continues to demonstrate not only sustainability but also growth. 

    • The most serious and popular stablecoin – Tether (USDT) – took fourth place in the ranking with a market capitalization of $4.66 billion. Although the total market capitalization of USDT has grown by only 0.5% over the past four weeks, Tether has made significant progress compared with his seventh place, which he held on February 15th.

    However, due to a sharp drop in the value of assets against which USDT is traded, Tether's trading volume fell 20% from $60 billion to $48 billion over the same period.

    • Stablecoin USDC also made significant progress over the past month, rising from 30th place with a capitalization of $430 million to 17th place with a market capitalization of $601.5 million.
    • The third-largest stablecoin, Paxos Standard (PAX), increased its market capitalization by 5% in four weeks from $208 million to $218 million. Despite a relatively small increase in capitalization, PAX climbed from 42nd to 27th place in the cryptocurrency top.

    Stablecoin is a relatively young phenomenon in the crypto industry, nevertheless, it quickly gained popularity among traders who want to withdraw their funds from the volatile Bitcoins and other cryptocurrencies, but not to leave the cryptocurrency market. Players consider stablecoins an island of stability due to their attachment to more traditional currencies and assets.

    At the end of 2017, the market capitalization of the stablecoins did not reach $1 billion. By mid-2018, this figure exceeded $3 billion. At the end of January of this year, BeInCrypto editors reported that at the time of publication, there had been placed about $6 billion of stablecoins awaiting a signal to enter the market.

    Over $7 billion at a low start

    Since then, this figure has grown significantly again. Currently, the massive panic in world markets has further strengthened the position of stablecoins. Stablecoins are chosen more often compared to other cryptocurrencies.

    As Bloqport (an analytical resource) recently reported, the stablecoin market has grown by an impressive $1.5 billion only during the last month. Bloqport is optimistic about these figures and believes that investors are just waiting for a convenient moment to enter the cryptocurrency market. Then a sharp influx of capital into Bitcoin and other cryptocurrencies will cause their active growth.

    However, while the market fear index is at an extreme point, such a rally cannot be expected. Moreover, at the moment, such an increase in the stability of the stablecoin market only means that players use stablecoins as a hedging tool against the cryptocurrency market itself.

    The Financial Stability Board of 20 countries (G20) presented a report on the study of stablecoins. The report noted that their recent popularity can even create excessive competition for traditional money.