on the crypto
The value of all stablecoins has surpassed $ 10 billion, after rising more than 70% in just two months, according to Coin Metrics. The growth in the stablecoin offering comes when several cryptocurrency traders choose to trade altcoins using dollar-supported digital tokens instead of bitcoins.
Tether in the lead in the race to the top of the stablecoins
The majority of stablecoin's growth comes from tether, which accounts for almost 90% of the total stablecoin supply. The largest tethering markets measured by trade volume are supported by two exchanges based in Asia, Binance and Huobi, according to CoinGecko.
Both exchanges support nearly 200 different cryptocurrencies, which makes them attractive platforms for altcoin traders. Almost every exchange offers the possibility to choose assets supported by different currencies of quotation, usually dollars or bitcoins, which determine the value of alternative cryptocurrencies.
Altcoin traders have historically preferred to use bitcoin or even ether as the quote currency per token. But in the past two years, this trend has changed significantly.
Stability is a fundamental factor
A growth in stablecoin trading in listed pairs leads to a significant overall growth in the total volume of altcoin trading, according to Nomics data. But this growth excludes ether and bitcoin couples, which mostly remained below the highs reached at the end of 2017.
The stability of tokens supported by dollars is a primary advantage over using bitcoin as a quote currency, according to an analyst. "Stablecoins have always had an advantage over bitcoin as a pair in basic trading due to their inherent price stability," said Aditya Das, a cryptocurrency market analyst at Brave New Coin. "Stability means that traders feel more confident in holding one and using it as a liquidity tool for trading."
The crypto derivatives market also changes
The demand for pairs listed with stablecoin in the spot cryptocurrency markets also influenced derivative products. For example, BitMEX, the second largest open interest cryptocurrency derivatives market, is deeply aware of the shift in demand for trading products that are now moving more towards stablecoins.
"We noticed that traders prefer to trade pairs with denominations similar to USD as the domain for altcoin trading has moved from XBT-based Poloniex to USD and USDT-based Binance and Coinbase," said Greg Dwyer, business development manager. BitMEX.
Earlier this year, BitMEX launched two new future products: XRPUSD perpetual futures and ETHUSD quantum futures. "An upward trend for stablecoin-listed couples makes perfect sense to me," said Catherine Coley, CEO of Binance.US. The new generation of traders and investors "think in dollars and trade in stablecoin," he added.