Stablecoins have been seen as an important stakeholder to the crypto market cap as they are crucial to incoming investment and inherently eliminate volatility from the market. Asset holders buy stablecoins that are pegged to major cryptocurrencies and keep their presence in the digital market while basically owning fiat. They act as store of values and mediums of exchange for users, while persisting to maintain stability in the crypto market.
While stablecoins are not new to controversy, such as seen with Tether in 2018 and claims of Bitcoin price manipulation, but they are widely believed to be forebearers of mainstream cryptocurrency adoption in the coming years. Senior Counsel at Michael Best law firm, Cheryl Aaron spoke to BlockPublisher regarding her opinion on what will drive mainstream crypto in the coming year. She echoed to the importance of stablecoins and said:
There will be a few key drivers of mainstream cryptocurrency adoption in 2019. The first is the rise of stablecoins, which are a type of cryptocurrency designed to minimize volatility – one of the key reasons that certain investors and businesses have avoided cryptocurrencies to date.
She explained the utility of stablecoins that work in a variety of ways to aid the crypto market and its user base in general. Pegged to the USD and a handful of exchanges, stablecoins provide a safe space age into the cryptocurrency space. Cheryl further stated:
Stablecoins may be pegged to fiat currencies like the US dollar or to exchange-traded commodities, among other things. Stablecoins can act as a price peg for goods and services, and can be used as a store of value and medium of exchange, much like fiat currencies, but with the added benefits of cryptocurrencies (speed, immutability, cryptographic security, etc.).
Stablecoins also constitute a good portion of the crypto market cap, as the top 4 stablecoins all boast market caps of over $140 million with the top stable coin, the USDT touching $2.1 billion in market cap. The rest of the market remains dependent on the greater valuation of these stablecoins as they’re most equipped to bring early investment into the space. Moreover, international investment groups and financial tycoons invest heavily into the stablecoin market, and cash out during a crypto bull run. Maybe, mainstream crypto adoption is just a bull run away, as stablecoins pave ways for new entrants in the market.