In a new market that has grown in demand and popularity, there is now room for the introduction of stablecoins. A relatively new idea, these coins are pegged to traditional currencies like USD or EUR so their value doesn’t swing with the price changes of cryptocurrencies.
The “bitcoin futures price” is the value of a contract for future delivery of bitcoin. The current price is $7,200 and it has collateralized $7.2 billion worth of Bitcoin futures.
Stablecoins are undeniably important in the rapidly growing cryptocurrency sector. In reality, the business has witnessed enormous development this year, owing to its simplicity of accessibility and cost-effective characteristics, which serve to meet the world’s need for dollars.
Bitcoin futures are being collateralized with stablecoins.
The quantity of Stablecoin was around $27 billion in January. Fast forward to the end of the year, and its supply has risen to roughly $140 billion, signifying a 400 percent increase in only a year.
Apart from offering convenient access to the US Dollar, one of the most common uses of stablecoins has been in Bitcoin trading, where it has provided crypto exchanges with on/off ramps dollar access while also letting crypto traders to borrow against their digital asset holdings.
According to Glassnode statistics, the amount of leverage employed by traders in the Bitcoin futures market has dropped dramatically since then. By April, the figure had risen to over 70%. It’s currently as low as 45 percent, thanks to traders’ assets being collateralized in Stablecoins, which means they don’t have to worry about a market downturn.
A closer examination of the data reveals that stablecoins like as BUSD, USDT, and others are collateralizing almost $7 billion in Bitcoin futures open interest.
Stablecoins are becoming more popular.
With the growing popularity of stablecoins, authorities throughout the globe are becoming increasingly interested in the activities of stablecoin issuers in order to better safeguard investors.
According to a recent assessment from the United States Treasury, stablecoins should be regulated like banks so that they can prove that their reserves are significantly supported by the famous 1:1 promise.
Stablecoins, according to Rep. Patrick McHenry (R-NC), might be the first crypto area where financial authorities figure out how to effectively govern.
Stablecoins, Bitcoin, Posted in: Bitcoin, Stablecoins
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