Topic: Stablecoin price becomes unstable due to Bitcoin’s price fluctuations? - page 2. (Read 238 times)
March 19, 2020, 07:26:51 AM
This observation is pretty normal @OP and this is mainly because of the huge panic in the crypto industry due to the spread of COVID 19. Many enthusiasts are selling off their bitcoins to hold the USDT and other stable coins so that at least they don't lose value in what they have accumulated at the moment. Once prices start rising I am sure the stabel coins will be back to its pegged value against the USD
March 19, 2020, 06:55:02 AM
Well I do think that it is because of high buying and selling , the trading is very high , since the banks are shut down and people are in a big problem , they are using cryptocurrencies and using them means volatile buying , selling , trading , using exchange pairs , so even if the price is getting up and down I do think it would be normal for a time like this.
Even normal currencies are crashing and banks are trying hard to maintain their value .
Therefore is people are thinking of encashing temporarily against stable coins and using it , it ofcourse would cause the price to jump around.
Even normal currencies are crashing and banks are trying hard to maintain their value .
Therefore is people are thinking of encashing temporarily against stable coins and using it , it ofcourse would cause the price to jump around.
March 19, 2020, 04:43:38 AM
The price of a stablecoin is determined by the price which trader pays for buying it and they aren't related to the algorithm for which Tether or similar stablecoins were created. Whenever there is a huge drop or huge pump there would be significant rise and down in the Tether and other stablecoins prices. This is due to the fact traders are selling their btc and buying up chunks of stablecoins. With the supply and demand criteria this tends to create a demand for the coin and the highest bidder will receive the coins. Similar situation happens during the price pump of famous crypto as well. When people are willing to buy bitcoin on large amounts which is resulting in a pump there we would be seeing a sell off of stablecoins.
Stablecoins are designed to stay in $1 but if they are subjected to severe market crashes or pumps the price of stablecoins like Tether oscillates to meet the criteria and demand. This is how the supply and demand algorithm for almost all the fiat currencies work in real world. If the economy of a country is sliding downwards there would be a dump in the national currency while pegging it to USD and vice versa during the economy of the country is increasing.
Stablecoins are designed to stay in $1 but if they are subjected to severe market crashes or pumps the price of stablecoins like Tether oscillates to meet the criteria and demand. This is how the supply and demand algorithm for almost all the fiat currencies work in real world. If the economy of a country is sliding downwards there would be a dump in the national currency while pegging it to USD and vice versa during the economy of the country is increasing.
March 19, 2020, 04:24:41 AM
Stablecoin price becomes unstable due to Bitcoin’s price fluctuations
http://bit.ly/200319_EN
It seems that stablecoin (substitute for the US dollar in the crypto market) prices become unstable during huge Bitcoin price fluctuations.
According to crypto disclosure platform Xangle, there were 58 cases confirmed since 2015 when the stablecoin USDT’s prices fluctuated by a maximum of $0.05 within 24 hours. Out of the 58 cases, there were 17 cases where Bitcoin prices fluctuated by more than 10% and 36 cases when Bitcoin prices fluctuated by more than 5%.
This is allegedly because some exchanges do not allow the withdrawal of fiat currencies; hence the only way for investors to cash out Bitcoin is by buying stablecoin. On the other hand, investors might have preferred USDT over fiat when Bitcoin’s price was undervalued, resulting in an overdemand of USDT.
http://bit.ly/200319_EN
It seems that stablecoin (substitute for the US dollar in the crypto market) prices become unstable during huge Bitcoin price fluctuations.
According to crypto disclosure platform Xangle, there were 58 cases confirmed since 2015 when the stablecoin USDT’s prices fluctuated by a maximum of $0.05 within 24 hours. Out of the 58 cases, there were 17 cases where Bitcoin prices fluctuated by more than 10% and 36 cases when Bitcoin prices fluctuated by more than 5%.
This is allegedly because some exchanges do not allow the withdrawal of fiat currencies; hence the only way for investors to cash out Bitcoin is by buying stablecoin. On the other hand, investors might have preferred USDT over fiat when Bitcoin’s price was undervalued, resulting in an overdemand of USDT.
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