Stablecoins (14)

Keep up with the top industry updates as we present bi-weekly market insights that are important to traders in the institutional space. This week, Kelvin Lam, CFA, Head of Institutional Research for OKX, looks at one top-of-mind issue in this installment: how these three key market drivers present a compelling opportunity for crypto assets in Q4.

Crypto users who want to be able to access the price stability of the U.S dollar (USD) can get it either through: - __Direct banking access__, by depositing and withdrawing traditional currency - __In

This article represents the personal views of the authors and isn't intended to provide any investment advice or solicitation to buy, sell or hold digital assets. I. Summary From the bull market of 2021 to the bear market of 2023, the cryptocurrency market has undergone significant changes. The total market value decreased from 3 trillion to 1 trillion US dollars, but the market value of stablecoins only decreased by 30%.*

June 2024 saw Tether, the platform behind the USDT stablecoin , launch Alloy (aUSDT), an over-collateralized digital asset backed by Tether Gold (XAUt). The asset provides more gold collateral than the value of aUSDT tokens issued, enhancing its stability and making aUSDT reliable for everyday payments, trading, and saving.

What's your strategy for crypto trading pairs? In the crypto space, trading pairs are fundamental. They allow traders to exchange one cryptocurrency for another, often pairing a dominant currency, like Bitcoin or Ethereum, with many others.

Formerly known as USD Coin , USDC has successfully established itself as one of the go-to stablecoins in the crypto space. Despite launching four years later than its biggest stablecoin competitor, and are often compared to this day. While Tether's stablecoin (USDT) has the largest market cap, Circle's USDC offers a compelling alternative given its reputation for being always-on and offering 1-to-1 redemption for US dollars.

From decentralized exchanges exploring revenue sharing to Bitcoin Layer 2s establishing themselves as viable scaling solutions, the DeFi landscape is continuing to innovate and offer exciting alternatives to traditional financial systems. One key component of DeFi growth is the stablecoin — a cryptocurrency pegged to a fiat currency like the U.S. dollar. The inherent stability of stablecoins ultimately allows crypto enthusiasts to hold value without the wild price swings often associated with other cryptocurrencies.

Keep up with the top industry updates as we present bi-weekly market insights that are important to traders in the institutional space. This week, Kelvin Lam, CFA, Head of Institutional Research for OKX, looks at one top-of-mind issue in this installment: How the tightening of the US money supply continues to hamper liquidity in the digital assets space.

USDT (USD Tether) has established itself as one of the most popular U.S. dollar-pegged stablecoins available today. The asset’s low volatility and USD peg makes it appealing to traders and underpins USDT’s utility as a popular half of various trading pairs offered by most crypto exchanges, including OKX.

Launched by a Decentralized Autonomous Organization (DAO) named MakerDAO in November 2019, Dai (DAI) is a crypto-collateralized stablecoin that's soft-pegged to the US Dollar at a 1:1 ratio. DAI is issued through an Ethereum-based named the Maker Protocol.

Stablecoins are cryptocurrencies that are pegged to another currency or asset class. Usually, this ‘peg’ is a fiat currency such as USD or EUR, but it can also be a commodity such as gold. Being pegged to an asset means the stablecoin’s value is meant to track the value of its peg. This, in theory, makes stablecoins a less volatile form of cryptocurrency. There have been instances, however, of stablecoins losing their pegs so the stability of their price isn't guaranteed.

Cryptocurrencies like Bitcoin (BTC) are volatile compared to the relatively stable prices of major fiat currencies such as the US dollar, or other assets like gold. Stablecoins are digital assets created to preserve consistent purchasing power, serving as valuable tools for cryptocurrency traders and individuals engaged in international transactions. These assets provide price stability, since they're pegged to a reserve asset — including the US dollar or gold. This peg lowers the volatility of the coins by offering a digital currency suitable for daily commerce and payments between exchanges.

Stablecoins, aptly named for their design that aims to reduce volatility, provide a more reliable form of cryptocurrency. This stability comes from being pegged to a fiat currency such as the US dollar or a commodity like gold. Because the coin's price tracks the price of its "peg," its value is generally more stable than coins such as , , and . It's easy to see why stablecoins are growing in adoption among traders and finding a variety of new use cases.

USDT, also known as Tether, is a stablecoin that's pegged to the value of the US dollar. It operates on multiple blockchain networks, including Ethereum (ETH) , Tron (TRX) , Algorand (ALGO) , Solana (SOL) , and Bitcoin's Omni Layer Protocol. The asset is issued by the company Tether. As of January 2024, USDT continues to hold its position as the third-largest cryptocurrency by market cap, trailing only and Ethereum.