Cryptocurrency Investors Turn to Stable Currencies as Cash Substitutes

03/03/2023 11:34 • Daily Digest • 79 views

On March 3, it was reported that after the crisis of Silvergate Capital Corp, a cryptofriendly bank, investors were supporting the circulation of stable currency and turning to tokens equivalent to US dollars as cash substitutes. The activities of the two largest stable currencies, the USDT of Tether and the USDC of Circle, rose in India on Friday morning. According to the pricing data of CoinGecko, the 24-hour trading volume of USDT on March 3 was $43.2 billion, compared with $39.9 billion in the previous day, while the trading volume of USDC jumped from $3.4 billion to $4 billion.

After the Silvergate crisis, investors turned to stable currencies, and the market value of USDT increased by nearly $600 million

Interpretation of the news:

The recent crisis of Silvergate Capital Corp, a well-known cryptofriendly bank, has spooked many cryptocurrency investors, leading them to seek alternative forms of currency. As a result, they have turned to stable currencies, such as Tether’s USDT and Circle’s USDC, which are pegged to the US dollar and function as digital substitutes for cash.

This shift in investing behavior has been reflected in the rising trading volumes of both USDT and USDC in India, with USDT seeing a significant increase in trading volume. According to CoinGecko’s pricing data, the 24-hour trading volume of USDT on March 3 was $43.2 billion, compared to $39.9 billion the previous day. Similarly, the USDC trading volume jumped from $3.4 billion to $4 billion in the same time frame.

Stable currencies have become popular amongst cryptocurrency investors because they offer a measure of stability, in contrast to the volatility that is so prevalent in the cryptocurrency market. As they are pegged to traditional currencies, such as the US dollar, stable currencies provide a sense of predictability that helps investors better manage risk. Additionally, they can be used as a digital substitute for cash, allowing users to make purchases without having to convert their cryptocurrency into traditional currency.

This shift towards stable currencies has been fueled by the recent crisis at Silvergate Capital Corp, which has shaken investor confidence in the cryptocurrency market. This event has reminded investors of the risks associated with cryptocurrency investing, including volatility and the potential for scams and fraud. As a result, many investors are reevaluating their investment strategies, with some turning to more stable investments such as stable currencies.

In conclusion, the recent crisis at Silvergate Capital Corp has caused a shift in cryptocurrency investor behavior, with many turning towards stable currencies such as USDT and USDC. These stable currencies offer a measure of stability and predictability that is attractive to investors, particularly in the current volatile cryptocurrency market. As investors seek to manage risk and protect their investments, stable currencies are likely to remain a popular choice amongst cryptocurrency investors in the near future.

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