Tether The Most Stable Stablecoin, Santiment Finds in Investigation

Colin Muller

Santiment, a crypto-focused data analytics outfit, has conducted an investigation into nine crypto stablecoins, in order to understand what makes them tick.

Using a standard deviation analysis, Santiment found that the (centralized) Tether stablecoin (USDT) was the most stable coin during the last year overall, followed by USDC, PAX, and GUSD. This means that all of the most stable stablecoins are centralized ones, dependent upon trusted middle entities to back their stablecoins with fiat money. (See CryptoGlobe’s stablecoin guides - part one and two - here.)

stablecoindev.png(source: santiment.net)

Santiment’s analysis continued into more fine-grained timeframes of observation, in an attempt to understand the provenance of stablecoin volatility. They conducted a linear regression analysis between volume and each coin’s price deviation, and did so against two categories of volume: each coin’s volume, and general market volume using bitcoin as the bellwether.

The upshot is that nearly all coins react strongly to high volume in the general market (exception: NUSD), and become more volatile during those times, including Tether. In this instance, the decentralized DAI stablecoin got high marks both volume metrics and perhaps deserves special attention. (CryptoGlobe recently reported on the considerable increase in DAI usage of late.)

As an off-the-shelf test of this finding, we can casually observe that stablecoin volatility has indeed broadly increased since November 14, when bitcoin broke its $6,000 price support and sent crypto markets into a new season of high volume and volatility.

stablecoinchart.png(source: stablecoinindex.com)

The Tether Story

Tether has had anything but a stable history, so it is perhaps a slight surprise that it is the most stable stablecoin.

Tether, along with the Bitfinex exchange with whom Tether has shared management and banking relations in the past, has often been in the spotlight for trouble with its banks. CryptoGlobe reported recently that US law enforcement agencies were doubling down on investigating Tether and Bitfinex, which have long been accused of manipulating crypto markets by printing Tether tokens with no actual dollar backing.

In an interesting recent development, Bitfinex seemed to distance itself from Tether slightly by rolling out the capability to trade Tether against fiat dollars and euros, as well as the ability to withdraw and deposit in fiat currencies. Tether itself also recently opened up the ability to withdraw dollars for USDT directly from its website - but only if withdrawing $100,000 or more.