The cryptocurrency market is the most volatile financial asset market for the past year without a doubt. About 12 months ago, Bitcoin (BTC) soared above US$20,000 in a move that saw most cryptocurrencies appreciate with the top coin.
Today, the same piece of cryptographically secure asset trades at US$3.500 (85% drop from its ATH) as the market experienced one of the worst bearish runs in its decade-long history.
During the year however, stablecoins have become a delight to many crypto investors as they offer a low volatility option in investing in cryptocurrencies.
Stablecoins Massive Rise In 2018
As the term “blockchain” and “Bitcoin” became massively popular in 2017 so is the term “Stablecoins” this year. Currencies such as Tether (USDT) and Dai (DAI) have become a popular option of investment following the wild swings experienced across the cryptocurrency market.
Stable coins has an equal share of critics and enthusiasts with some praising the low volatility they offer while some doubt the importance of these coins.
In a Crypto Summit by Bloomberg on Friday in London, panelists offered various views on the current state of the market. They agreed on the fact that the current bear run being experienced in the market will soon end as the cryptocurrencies gain more adoption across the globe. Maybe reaching the heights seen at the end of 2017.
The Chief Investment Officer at CCL Investment Management, James Bevan further assures the early crypto investors that the current times were a blip to better things in future. The institutional investment will soon get into the space despite recent troubles as they have done before in conventional currencies and transaction systems.
Adding to stablecoins, the panelists also focused on smart contracts technology that also offers so much to blockchain technologies. The panel singled out the leader in smart contracts, Ethereum for the potential it holds in future. James further weighed in the two areas of cryptocurrencies as the main drivers of growth in the industry in future. He said,
“While no one forecast an immediate rebound in crypto prices — Bitcoin has lost about 80 percent of its value this year — they cast the current downturn as more like growing pains than rigor mortis. In fact two areas of growth for the industry will come from low-volatility tokens known as stable coins and so-called security tokens, digital contracts that represent ownership of assets such as real estate or stocks.”
Stable coins solves the volatility problems present in crypto while offering decentralized, transparent, secure, private features that cryptocurrencies enjoy. This innovative, secure and digital currency has set precedence in the global financial systems and offers a gateway for cryptocurrency adoption in future.
Merchants, stores and risk averse investors require a low volatile asset for transaction purposes, and stablecoins provide just that. However, investors have to be careful on the type of stable currencies they invest in. Recently one of the stablecoins collapsed from the set value of US$ 1 to less than US$0.04 in a couple of hours after reports emerged the company had no reserves backing the token.