In the world of crypto-trading, there are two schools of thought when it comes to the role played by stablecoins. The first group of traders welcome the idea of stablecoins such as Tether (USDT), True USD (TUSD), Paxos Standard (PAX) and more. The second group thoroughly dislike them as shall be explained.
As the name Stablecoin suggests, they are pegged to popular fiat currencies such as the United States Dollar on a one to one ratio. They provide traders the option of hedging against the volatility of the crypto markets. Stablecoins have been widely used to avoid losses during the current crypto bear market. They have been a welcome addition to the crypto markets.
The second school of thought with regards to stablecoins see them as taking away valuable market capitalization from Bitcoin (BTC), Ethereum (ETH), XRP, Litecoin (LTC) and prominent cryptocurrencies that have proven to be stable during times of turmoil in the crypto markets.
Take for example USDT with a market cap of $2 Billion. In a hypothetical situation where traders could transfer their USDT holdings to maybe Litecoin, we would have a situation where the latter would be valued at twice its current price of $42. (Litecoin’s market cap is currently valued at $2.5 Billion.)
Binance Introduces a Combined Stablecoin Market
However, when it comes to catering for the needs of its clients, Binance has continued to offer a variety of stablecoins to choose from in its combined stablecoin market. At the moment of writing this, the Combined Stablecoin Market (USDⓈ) has the following stablecoins paired with top cryptocurrencies.
- Tether (USDT)
- True USD (TUSD)
- USD Coin (USDC)
- Paxos Standard (PAX)
- Stable USD (USDS)
Popularity of Stablecoin Pairs
The aforementioned stablecoins do sometimes deviate from the $1 anchor value. One example is when rumors broke of Tether being delisted from Binance. As a result, USDT fell by approximately 5% to a value of $0.95. In such a case trading USDT against the other stablecoins netted a handsome profit.
Stablecoins rarely deviate from the $1 mark as in the above example. The day-to-day variance can be in the tune of one or two cents but considering that this makes up 1% to 2% profits when trading, it makes sense to pair stablecoins against each other for scalping opportunities like these.
Bitfinex has also seen the opportunities presented by offering stablecoin pairs. The exchange recently introduced margin trading for USDT paired with the USD.
Binance Adds More Stablecoin Pairings of USDS
Only a few hours ago, Binance has announced that it will open trading for the following stablecoin pairs on Valentines day at 10 am (UTC).
The above adds to a budding list of stablecoin pairs available on the exchange.
What are your thoughts on the entrance of stablecoins into the crypto space? Are they relevant or part of the old way of thinking according to fiat? Also, do you think trading of stablecoin pairs is profitable? Please let us know in the comment section below.
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Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.