Stablecoins Become Spectacular During Crypto Market Crash

The rapidly increasing market of cryptocurrencies has drastically narrowed by 30 % during the past seven days. As a consequence of the downsizing movement in the market, traders rush into closing their volatile accounts. At the same time, the stablecoin market became more salient. As Cointelegraph stated, during the last three months, overall stablecoin has enlarged by 190 %.  

Stablecoins Are Preferred Among the Traders

Despite the growing supply, it is worth noting that not all coins are the same. For instance, some centralized stablecoins such as Tether (USDt) and Center’s USD Coin (USDC), and these stablecoins are a lot more preferred among the traders. USDt is at 3rd, and USDC is the 10th most significant coin in the market according to CoinsMarketCap’s list. Indeed, these two coins hold approximately 80 % of the market of stablecoins concerning the data of CoinGecko. 

Stablecoins

In addition to their shares of these centralized stablecoins and how well they perform in the market, there are algorithmic coins. This kind of stablecoins is specified at a particular supply. They can determine its value depending on this specification. In other words, they automatically upsize or downsize concerning the supply of the asset. CoinTelegraph claims that this specification is no longer available for some of these algorithmic coins. 

TerraUSD (UST) is a prominent example portraying the situation. On Sunday, May 23rd, UST, associated with the LUNA coin at the press time of $ 0.95, had fallen to $0.92. Thor Chain, the decentralized liquidity protocol account on Twitter, mentioned that the asset went under stress tests and encouraged investors to support building it. Furthermore, Thorchain emphasized the role of Do Know, the founder of Terra, and team backers as responsible for the pulse.

Meanwhile, Do Kwon responded on Twitter by stating that there was no significant change regarding the basics of Terra. Do Know also pointed out the stressed economy has been experiencing. He wrote that Terra managed to maneuver the risks and survived the worst market crash of recent cryptocurrency history. The most important takeaway of Do Know’s tweets is undoubtedly the assertion he raised on the future of decentralized money. Decentralized, pure, and unbiased money will continue to be the primary goal of the crypto market for a while. Therefore, the community will spring back from such a temporary market crash. 

Though Do Know draws a positive picture, it seems that not everybody buys it. In fact, one of the followers on Twitter has replied with a critical question on the relationship between UST and the dollar. The peg of UST has not pursued the dollar. It continues to lose its value against the dollar. 

The ongoing discussion on Twitter is stunning as some other users develop answers to such questions. aAs an answer to the abovementioned question, a user said that UST is an algorithmic stablecoin. It increases and decreases the values of UST to store the fixed value. As the user reminds us, UST has always been back to the dollar, so we should not be worried.   

That is just an example, and different algorithmic stablecoins are extremely invaluable or valuable against $1. In the report of CoinTelegraph, Ampleforth (AMPL) went down to $0.48, which was the lowest value of the entire year. Ether-backed RAI, another algorithmic stablecoin, survived the market crash by reaching almost $3 peg.  

SEE ALSO:

Why Bitcoin Volatility is not a Problem

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