Follow along as Valkyrie's Head of Portfolio Management, Bill Cannon, highlights a notable "byte" from the markets each week.
Over the past couple months, stablecoins have been in the spotlight in crypto market news. What are they, and what are they used for?
Over the past couple months, stablecoins have been in the spotlight in crypto market news. What are they, and what are they used for? A simple description could be calling them a digital currency, with the U.S. digital dollar as the main example. Fiat-backed stablecoins are some of the most popular stablecoin products and are completely different than algorithmic stablecoins which are attracting the attention these days in cases such as Terra. Fiat-backed products, which now include a recently launched Euro-backed stablecoin, are growing in circulation as crypto investors keep their dollars decentralized waiting to be invested. That's good news with almost $150 billion in market cap currently, a notable rise from just under $10 billion last year.
The more popular products are similar to money market accounts where they are mainly backed by US treasury bills and highly rated commercial paper. Here in the US, investors are waiting to put these digital dollars back to use, good news for that expected return to markets! Meanwhile abroad, U.S. dollar backed stablecoins are being used to park cash in inflation hit countries like Argentina to maintain value in a depreciation environment. Please find the following quick read articles to educate yourselves on the different types of stablecoins, the rising popularity of these instruments, Valkyrie's current weekly market review with page 2 dedicated to stablecoins, and finally, more color on the Argentinean example. I guarantee a full understanding of this market by the time you're done.