Stablecoins provide ease of access for traders and investors in the crypto markets and increase liquidity that would otherwise take hours or days to process via traditional payment rails going from fiat to crypto or vice versa.
According to CoinDesk Research data pulled from Messari, top U.S. dollar-backed stablecoins such as Paxos Standard (PAX), Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and TrueUSD (TUSD) have all retained their market capitalization º that is, they are trading at the value of their deposited assets º over the past seven days, shifting less than 0.25 percent.
“With the significant level of ‘risk-off’ trading in every asset class, cash is again king, and in the crypto market the best representation of that is the more liquid USD [U.S. dollar] stablecoins,” said Richard Galvin CEO at Digital Asset Capital Management based in Sydney, Australia.
“Our view is sellers are either doing this with a view to buy back at lower points in the future or because these stablecoins are their best and/or only way to hold U.S. dollars,” Galvin added.
Looking at the performance over March, the story remains the same amid the backdrop of one of the worst months in crypto’s history. While most of the market has been down since March 13, the industry’s top 5 stablecoins have barely shifted in value over a much larger timeframe.
Traditional assets have been taking a hit and major cryptos such as bitcoin (BTC) and ether (ETH) have experienced huge bouts of volatility and declines in value but stablecoins are looking more like a safe haven for those who want to remain in the market without exposing themselves to too much risk.
In a recent string of tweets, the CEO and co-founder of USDC issuer Circle, Jeremy Allaire, said it was “rewarding” to see that blockchain-based monetary infrastructure was working as intended.
“Fascinating to see ‘flight to safety’ within the crypto macro market, but also demand for high-quality USD liquidity for markets,” he said on March 14.
“Demand for internet dollars, digital, fast, global, secure, cheap to use, should increase significantly. People and businesses will want an architecture where they can make and receive payments with less counter-party risk and more security,” Allaire added.