The popularity of cryptocurrencies has skyrocketed in the last two years, owing mainly to their decentralized nature. All of these factors, including new projects, decentralized applications, trading platforms, and NFT marketplaces, have made major contributions to the development of the cryptocurrency user base.
As a result of the fast rise in popularity of cryptocurrencies, an influx of new users are flocking towards the crypto markets. These newcomers are interested in buying and holding the most costly cryptocurrencies that the cryptocurrency market has to offer with an aim to maximize their returns. However these newcomers to the crypto sector have found that the industry is heavily influenced by market fluctuations, and even the most secure and decentralized currencies have seen their value diminish.
As a great example of this, look no farther than the first quarter of 2021. Because of the influx of millions of new users into the cryptocurrency sector, the market saw a severe correction, with specific cryptocurrencies, such as Bitcoin and Ethereum losing more than half of their entire value. This has resulted in a significant change in the market toward stablecoins, which has provided a safety net for those seeking more price stability in an environment of growing volatility.
According to the Bitcoin Foundation, the total quantity of stablecoins in circulation has increased by 500 percent since 2020, which is a significant increase when considering the rise of stablecoins in general. In the year 2021, the usage of dollar-denominated stablecoins is expected to become more prevalent. Stablecoins have quickly risen to become one of the most widely used cryptocurrency coins on the market. Stablecoins are becoming more popular to protect investors from the volatility that is characteristic of the cryptocurrency market. This is due to the advantages that stablecoins offer.
Stablecoins backed by the U.S. dollar has seen a significant rise in value over the last year, reaching a peak of more than $100 billion in May of 2021. From what we’ve seen so far, the year 2021 seems to be a promising one for stablecoins. According to the most reliable data, the performance of stablecoins rose substantially with the fall in Bitcoin’s value in May of 2021.
In the second quarter of 2021, stablecoins continued their upward trend, with their total monetary base reaching moreover $107 billion, an increase of seventy percent from the first quarter and an astounding 803 percent year-over-year. Aside from that, stablecoins transacted a previously unheard-of volume of $1.7 trillion, which was more than twice the amount they transacted in the preceding quarter.
Stablecoins are transforming the cryptocurrency trading industry. In addition to sharing many of the same characteristics as other blockchain-based currencies, such as transparency, security, privacy, and accessibility, stablecoins also do not suffer from the extreme volatility that characterizes virtually every other cryptocurrency.
It is currently estimated that the market capitalization of stablecoins is more than $120 billion. The fact that the volatility of the bitcoin market does not influence them allows them to offer a fresh perspective to the table.
Cryptocurrency stablecoins are currently at the core of every cryptocurrency transaction that takes place. Because of stablecoins, you may now pay for your breakfast by scanning a Q.R. code. Businesses all around the globe are adopting cryptocurrencies, with stablecoins serving as a new and safe payment option for those doing business internationally. Because of stablecoins, we are now able to utilize cryptocurrencies in the manner in which they were meant to be used.
Stablecoins are widely available and may be found nearly everywhere. The development of Stablecoins is supported by industry titans, e-commerce behemoths, I.T. giants, and global economies, to name a few. In a wide range of financial services, stablecoins and cryptocurrencies have great potential to grow. Stablecoins have certainly helped millions of families all around the globe.
Stablecoins are finding utility in almost all new and emerging sectors of the crypto space. From trading to payments, from gaming to NFTs, every sector is opening doors to large-scale stablecoin adoption. This meteoric rise in stablecoin adoption has sparked much debate among regulators, conventional investors, and the overall cryptocurrency community. We will discuss which factors are affecting the rise in the demand for stablecoins and investigate why everyone wants to use stablecoins for their cryptocurrency applications.
Explaining the trading market’s growing interest towards stablecoins
In contrast to cryptocurrencies, stablecoins have a set value. Stablecoins are digital currencies backed by physical assets. Precious metals such as gold and fiat currencies such as the U.S. dollar may be included in these assets. Stablecoins are a kind of cryptocurrency with a set value based on blockchain technology. They provide many of the same advantages as other cryptocurrencies, including transparency, security, privacy, and accessibility, but without the risks.
Stablecoins can be used for trading on compatible cryptocurrency exchanges. Coinbase, Binance, and Kraken are all popular choices. Each platform has a somewhat distinct sign-up process, but it usually only takes a few minutes and includes basic contact information.
After you’ve registered, you can easily buy stablecoins in a 1:1 U.S. Dollar ratio. Credit/debit cards can be used for this. After you’ve purchased your fair share of stablecoins, you’ll find them in your wallet as an asset.
You can convert stablecoins as often as you like after you have tokens; for example, you can exchange your stablecoins against bitcoin. You can also trade against other well-known cryptocurrencies such as Ripple (XRP). Some platforms offer stablecoins for free, while others charge fees.
Interestingly, both Binance and Coinbase let traders receive fixed interest or yield farming rewards by staking their tokens. Additionally, users can frequently move stablecoins from trading sites to hardware wallets, such as ledger wallets.
Stablecoins are becoming more popular amid periods of economic instability, according to current market data. Because of the time and expenses involved in transferring money from cryptocurrency to fiat during market collapses, a significant number of traders, particularly day traders, prefer to retain their money in cryptocurrencies rather than move it from cryptocurrencies to fiat during market crashes.
The ease of use of stablecoins is fueling the demand
Stablecoins are also in high demand since they easily convert into fiat money and do not need any additional steps. In order to meet the enormous demand for stablecoins, almost everyone is obligated to buy them. Users of peer-to-peer marketplaces and trading platforms are encouraged to buy and sell stablecoins, which will aid in the development of a secondary trading market in the long term. Because of the high demand for stable coins, dealers are taking advantage of the demand-supply connection and selling their stable coins at a higher exchange rate in fiat currencies than they would have otherwise. As a result of this, stablecoins have emerged as a powerful trading currency, with demand for them increasing by the day.
Another factor contributing to the widespread use of stablecoins in the market is the meager exchange rates connected with them. User convenience is enhanced because stablecoin transactions are practically instantaneous, with minimal transaction costs accruing to consumers who profit from the ease of quick liquidity and exchange. Unlike more established crypto assets such as Bitcoin or Ethereum, where network expenses and gas fees may be prohibitively costly, stablecoins’ low fee structure makes them an ideal investment choice.
After the crypto-crash that occurred in March of 2020 and the economic collapse brought on by the COVID-19 epidemic in the United States markets, stablecoins are expected to gain in popularity in the next years. Stablecoins have the potential to be used in a variety of applications, including cryptocurrency trading, cryptocurrency asset holding, and cryptocurrency investment.
Furthermore, stablecoins are rapidly becoming the currency of choice on DeFi platforms as well as on a variety of NFT markets, according to CoinDesk.
In the last few years, there has been little question about the popularity of stablecoins, which has grown primarily as a consequence of their capacity, in many cases, to provide a viable alternative to the volatility associated with conventional cryptocurrencies.
Stablecoins have gotten the most attention from the media in recent months. Its excellent long-term prognosis, driven by exciting innovations, increasing maturity, and an extraordinary capacity to endure short-term unfavorable behavior, among other factors, is one of the most attractive elements of the stablecoin sector to watch.
Stablecoins have gained significant traction in 2021, and by the looks of things, this trend is not expected to slow down any time soon, if at all. The number of traders that are entering the crypto trading sector is growing at the present moment. Additionally, nearly all of them are interested in having a part of their portfolios comprised entirely of stablecoins.