The cryptocurrency market has been in shambles ever since the coronavirus outbreak reached critical levels, however, the panic has been positive for the growth of stablecoins, which have grown by billions in market cap since the selloff first began a month ago.
Stablecoins Provide the Only Flight to Safety Amidst Coronavirus Crisis
The cryptocurrency market, like the stock market, precious metals, and basically any other asset across the world currently, are struggling to maintain valuations during a panic-induced selloff stemming from a global pandemic and sudden recession.
This month, all markets have been bleeding out, with Bitcoin dropping from $10,000 to $4,000 in less than a month, the stock market setting records for the worst trading sessions since 1987, and the valuations of precious metals have had years of growth eliminated in mere days.
Related Reading | No Haven Safe: Silver, Gold and Other Precious Metals Nosedive Alongside Bitcoin
Even safe-haven assets like gold have been suffering as a result of the extreme fear across the globe.
It seems as if no assets are safe, however, stablecoins have continued to do what they do best: provide a stable value and flight to safety during cryptocurrency market volatility.
Stablecoins are cryptocurrency assets typically tied one-to-one with real-world assets, such a real estate, however, its most commonly backed by fiat currencies like the US dollar.
Because values are pegged to the US dollar, valuations rarely fluctuate, and when they do, it is minimal. It’s given them an extremely helpful use case in acting as a flight to safety for investors to avoid losses during economic downturns or market-wide selloff.
Stablecoins can continue to function like other cryptocurrencies, acting as a cross border payment, digital currency, and contactless payment – yet another major benefit during the coronavirus outbreak.
Stablecoins are over $7b as of today. They've tacked on $1.5b in the last month. Nontether stablecoins well over $1b nowhttps://t.co/dKrQzFzAPq pic.twitter.com/70p2yj50hE
— nic "stomp the curve" carter (@nic__carter) March 23, 2020
Cryptocurrency Market Selloff Sparks Growth in Tether Competitors, Tether Expansion
Since the market selloff first began, the stablecoin industry has seen another $1.5 billion in growth over the last month alone. While Tether continues to dominate the overall cryptocurrency market as the king of stablecoins, non-Tether stablecoins have amassed to over $1 billion alone now.
Aside from Tether, growth in USD Coin, Paxos Standard, and many others are contributing to the rapidly expanding figure.
Related Reading | Cryptocurrency Exchange Order Books Are a Ghost Town, Data Shows
Frightened investors and traders are likely more comfortable and secure sitting in crypto assets that hold their valuations tied to the dollar, the global reserve currency and among one of the few assets holding up to the economic implosion.
And with no end in sight to the chaos that has only just begun, the stablecoin market is likely to continue to grow for the foreseeable future as investors look to any capital protection possible.
Featured image from Shutterstock
