Cryptocurrency
The Stablecoin Surge Is Built on Smoke and Mirrors
As reported on Coindesk, “There’s a desperate shortage of dollars. Despite the Federal Reserve creating new money at an unprecedented rate, the U.S. dollar exchange rate is rising. The U.S. government is pouring trillions of dollars into the economy to support failing businesses and people losing their jobs. When governments and central banks put new money […]
As reported on Coindesk, “There’s a desperate shortage of dollars. Despite the Federal Reserve creating new money at an unprecedented rate, the U.S. dollar exchange rate is rising. The U.S. government is pouring trillions of dollars into the economy to support failing businesses and people losing their jobs. When governments and central banks put new money into the economy, consumer prices usually rise. But in March, against what you would expect, consumer prices fell by 0.4%.
“As dollars are apparently being swallowed up by the black hole created by the coronavirus, issuance of dollar-backed stablecoins is soaring as more and more people invest in them. Especially popular are stablecoins such as USDT, USDC, BUSD and Pax, which are backed one-for-one with dollar reserves.
“What’s driving this growing interest in stablecoins? One explanation might be investors reaching for yield. As global interest rates fall, returns on conventional assets become increasingly disappointing. Stablecoins themselves don’t deliver dollar returns – indeed they are designed not to – but they do give easy access to the crypto world for investors looking for better returns…”