The effects of the novel COVID 19, or CoronaVirus, are being felt everywhere. The infectious disease has spread globally. Such is its effect on the world that it goes beyond the medical realm. Recent days have seen suspension of flights, international trade and even whole countries being locked down. Stocks have tumbled, billions of Dollars worth of wealth wiped out.
Cryptocurrencies, usually having an opposite movement to traditional financial markets have not been spared this time. The sudden crash of the market recently has been described in very vivid terms such as bloodbath by experts. Out of the burning inferno, however, stable coins have shined. Pegged to fiat in terms of 1 to 1 ratio, stable coins have enabled crypto investors to liquidate their assets without the need of obtaining fuat and syphoning the money back into their traditional bank accounts. A sort of a digital hedge, these pegged currencies have seen a significant rise in their use during the economic fluctuation. These coins have become more and more popular in recent times.
USDT
The first of stable coins, Tether US Dollar, or USDT, is the largest stable coin in the market. Despite its shady connection to one of the largest crypto exchanges and Tether treasury refusing to make its audit public, the stable coin has risen in ranks from the seventh largest crypto by market capitalization to 4th, just behind BTC, ETH and XRP.
USDC
Circle USD is another stable coin that was relatively very small in market capitalization. Before the crypto upheaval, it ranked at 30 overall. The sudden demand for stable coins to protect investments by traders means USDC has cut its ranking roughly by half and now stands at number 17.
PAXOS
An increase of 5% in market capitalization and minting of 7.6 million tokens by its treasury saw PAXOS gain traction to become the 27th largest crypto in the market, up from previous 42. Relatively very low in trading volume, PAXOS has witnessed an increase of trading volume of more than 80%, from USD 382 million to USD 684 million.
BUSD
Another notable stable coin that has shot up in market capitalization is Binance USD (BUSD). Introduced less than a year ago by crypto exchange Binance, BUSD has shot up from a meagre 243rd in line to 36 now. The fast and unprecedented adoption, however, mostly contributed to the exchange offering no maker fee on a trade if it involved BUSD. This small tactic and the reliance on stable coins is behind the fast climbing up the ladder.
Conclusion
Due to the stability of the stablecoins in the market, they are much less susceptible to market swings and thus see their market share increase considerably in the event of a price tank as witnessed recently. The stability and borderless nature of stablecoins are also attracting more and more investment as alternative payment methods have proven to be ineffective in dealing with the current economic crisis.