The market capitalization of most cryptocurrencies continues to decline sharply, however, several popular stablecoins experienced a considerable 200% increase in total trading volume during the past 24 hours - according to data fromCoinMarketCap.
Notably, the cryptocurrency market lost about $30 billion of its total market value last week (on November 14th), but during this same time period, the prices of certain USD-backed cryptoassets have remained stable (and gone up slightly).
Specifically, recently launched stablecoins including Circle’s (USDC), True USD (TUSD), and DAI have all seen more than a 200% increase in 24-hour trading volume. This, despite a huge sell-off in the larger cryptoasset market.
Stablecoins Become "Flight To Safety"
It now appears that stablecoins are proving to be a “flight to safety” as the prices of non-collateralized cryptoassets continue to decline. Because of strict regulatory policies, fiat currencies are often hard to obtain via crypto exchanges - which leaves stablecoins as the best available alternative to hedge against more volatile cryptocurrencies.
As most crypto enthusiasts would know, the controversial Tether (USDT) remains the most dominant stablecoin. However, due to heightened fears about Tether’s (the company that issues USDT) banking operations, many crypto traders may feel more comfortable dealing in the increasing number alternative stablecoins now available.
Significantly, bitcoin’s drop below the $6,000 psychological support level last week may have led to many investors selling their cryptocurrencies - in order to buy more stablecoins.
USDC Trading Volumes Surge Nearly 400%
Data from CoinMarketCap shows that USDC’s 24-hour trading volume increased almost 400% from slightly above $5 million on November 14th (before bitcoin’s plunge below $6,000) to over $25 million in a span of only 24 hours (by November 15th).
Moreover, USDC’s substantial increase in trading volume also helped it move into the ranks of the world’s 50 largest cryptocurrencies in terms of market cap. At press time, USDC’s total market capitalization is over $144 million and its trading at about $1.01.
As covered, Australia-based cryptoasset exchange, Coinjar’s CEO, Asher Tan has predicted that stablecoins will be the “next big thing.” Tan believes that collateralized digital assets have many more legitimate use cases, other than simply hedging against market volatility.