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Breaking News: Fed Holds Interest Rates Steady, Bitcoin Awaits Trend Reversal Above $27,000
stablecoin crypto demand
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What’s Driving The Demand Behind Stablecoin’s $10B Crypto Market Cap Milestone?

Tony "The Bull" by Tony "The Bull"
3 years ago
in Cryptocurrency Market News
Reading Time: 3 mins read

The growth of stablecoins in 2020 has been unlike anything seen before. Each week, more and more of the fiat-backed crypto assets are printed, nearly as fast and as often as the Federal Reserve is printing new cash.

After the latest boost, the total stablecoin market cap has achieved a milestone of $10 billion. But what’s driving the continued dramatic surge in demand?

Stablecoin Market Cap Reaches Over $10 Billion

All throughout 2020, stablecoins have achieved major milestone after milestone.

Following a strong crash in May, the stablecoin known as Tether “flippened” XRP for the third-ranked slot in the total cryptocurrencies by market cap.

Just the amount of Tether circulating on the Ethereum blockchain alone recently beat out Bitcoin in daily transactions processed. Tether also exists on Omni-layer Bitcoin and Tron’s blockchain.

Related Reading | It’s Official: Tether Flippens XRP After Recent Market Crash

But it’s not just Tether that is growing. Joining Tether in seeing a major boom in new tokens being minted, are other rival stablecoins USD Coin, Paxos Standard, and others.

In total, stablecoins have reached a combined total market cap of $10 billion. This represents over 3.5% of the total cryptocurrency market cap.

Bitcoin currently commands a massive lead at over 65% dominance, but Ethereum itself isn’t too far ahead of the total stablecoin market cap at just $25 billion, and only over 9% of the total market dominance.

But what exactly is fueling this incredible demand for more and more stablecoins?

Stable coins blast through $10 billion market cap. Should we be concerned at all? pic.twitter.com/9Yg4usJgt6

— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) June 15, 2020

What Is Driving The Demand For The Fiat-Backed Cryptocurrency Coin?

Tether has shed the negative stigma that was once surrounding it to become a highly respected asset in the crypto space.

Stablecoins were primarily used as a flight to safety when the cryptocurrency asset class’ notorious volatility struck.

As crypto prices nosedive, traders cash out their BTC and ETH into Tether and other stablecoins, ride out the storm, and use them to buy back in at lower prices.

Because these assets are tied 1:1 to the dollar, they rarely fluctuate in value very significantly.

However, these assets have clearly found additional use cases that have caused demand to surge enough for new supply to be made on the regular.

Related Reading | Stablecoins Are Printing Almost As Fast As The Fed

Crypto assets are no longer crashing, so the demand is due to other reasons. Crypto users have begun using stablecoins to transfer from one wallet to another, due to the speed increase and lower fees associated with stablecoins over Bitcoin.

Their role in decentralized finance is also growing.

It’s sparked an entirely new era of cryptocurrencies that more closely mimic digital versions of the dollar than Bitcoin.

Global government superpowers are all scrambling to create their own native version of a stablecoin. China is just about ready to roll theirs out, while the US has only just started talking about doing so as part of their stimulus efforts.

Even Facebook attempted to launch its own Libra stablecoin, called Libra.

With so much competition, yet so much demand, and an extremely familiar exchange rate, stablecoins have a chance to be cryptocurrency’s killer app.

Tags: bitcoinbtcusdBTCUSDTPAxos standardStablecoinstetherUSD CoinUSDCUSDTxbtusd
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Tony "The Bull"

Tony "The Bull"

Tony is the “always-on” Editorial Director and Head of Research at NewsBTC, leading a talented team of writers and editors across several different global time zones. Tony is also the founder of CoinChartist.io – an educational website focused on crypto trading. Partners include Elliott Wave International, TradingView, and more. Tony’s background includes an extensive, award-winning media production career and over fifteen years of publishing operations and management. In the past, Tony has founded several media websites and his content has been read billions of times. Past clients include the BBC, Fidelity, and many others. Tony "The Bull" is a level 3 CMT student (passed level 1 & 2), technical analyst, Bitcoin supporter, and avid speculator. He owns a python named Satoshi. Tony longs for the day when money is separated from the state. Tony is deeply fascinated by core market principles such as Elliott Wave Theory as they tie into mathematics like Fibonacci ratios. Market timing though DeMark indicators, Ichimoku, Gann tools, or Hurst Cycle Theory are also of key interest. Tony provides completely original content driven by exclusive, independent research. For more insights and education from Tony, check out his free TonyTradesBTC Telegram channel. Follow @TonyTheBullBTC on Twitter. You can also follow @CoinChartist_io on Twitter and subscribe on YouTube.

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