The market crash due to the coronavirus pandemic was indeed something historic that shook the financial market all over the globe. Major Cryptocurrencies like bitcoin (BTC) and Ethereum (ETH) failed to perform with BTC dropping as low as $3,800 and other coins sustaining massive losses.
However, amidst the market collapse one sector of the space that has been utilizing the situation really well, that is stablecoins. Stablecoins have come to find a niche in the crypto market for those who appreciate the value of the blockchain technology and crypto space, but don’t want to face the risks of market volatility.
Since the value of stablecoins is backed by real-world assets — such as the US Dollar, the damage taken by these assets have been minimal in comparison to stocks, cryptocurrencies, and even gold. Throughout the massive sell-off over the past weeks, the stablecoin market has been on the rise rather than following the natural market sentiment at that time.
A recent report from crypto analysis platform Coin Metrics published on March 23, states that during the downtrend stablecoins gained market share, spreads on spot and futures markets widened, transfer fees spiked as people rushed to deposit. However, it seems that the crypto community turned towards stablecoins to preserve their capital while the rest of the market suffered.
As per the report, the stablecoin supply started growing right after Bitcoin’s massive drop. As reported earlier by The Daily Chain, the total market cap of major stablecoins like USDT and USDC reached new all-time highs. The report noted:
“The dual impact of Bitcoin’s USD value halving and massive issuance of stablecoins led to stablecoins’ market cap as a percentage of Bitcoin’s doubling in a matter of days.”
“Stablecoin transfer value hit an all-time high amidst the market turmoil. On March 13th, the aggregated transfer of all stablecoins that we track (listed below) reached a new all-time high of $444.21M,” the report added.
USDC has been noted as the “biggest gainer” percentage-wise as it saw a 57% increase in market cap over the last 30 days. The stablecoin is primarily used on Coinbase but it was recently added as an asset to MakerDao’s decentralized finance platform. Besides this, the coin has also seen growing use on various other DeFi platforms as well.
Tether (USDT) issued on Ethereum also saw a major increase in market capitalization and now accountable for 50% of the total stablecoin market cap. The number went up from over $660M from March 10th to $3.7B as of March 22nd.
Interest in the stablecoins rising during the outbreak of the coronavirus can be attributed to the fact that stablecoins are much less volatile than digital coins. This feature tends to boost investor confidence in these digital assets.
People across the globe are using stablecoins amidst the outbreak to act as a store of wealth, while also using them as a mode of payment in addition to accomplishing a number of other tasks.