Stablecoins Gain Currency among Crypto Investors

Indian crypto investors are turning towards Stablecoins that are pegged to real world currencies like US dollars as a hedge against rising volatility in Bitcoin and other alt coins like Ethereum, Solano, and Polka-dot, and Shiba Inu, even as the Indian government moves to regulate or ban crypto assets.

Stablecoins like Tether (USDT), USD Coin (USDC) and Binance (BUSD) pin their value to the US dollar with a 1:1 conversion rate and are designed to keep the value stable.

Globally and in India, crypto exchanges have been experiencing rising volatility in cryptocurrencies as bulls and bears fight it out in the market and a regulatory overhang continues to haunt the sector.

The most popular cryptocurrency, Bitcoin, fell below $47,000 on global exchanges on December 4, losing nearly 20% in 24 hours, and has since hovered around $50,000.

The dominant digital currency touched an all-time high of $69,000 on November 11.

Unnerved by the gyrations of cryptocurrencies, Indian investors have found refuge in Stablecoins that allow users to make transactions with other currencies without the worry of value changing overnight.

“The Stablecoins allow investors the ease of converting between multiple currencies. Since currencies like Doge Coin and Shiba Inu are paired with USDT, investors find it easy to trade with Stablecoins. We have seen new investors first convert INR into USDT, hold it and then play the wider market when they feel there’s an opportunity,” said Praveen Kumar, founder, Belfries. “In times of extreme volatility too, people sell Bitcoin and hold USDT.”

Exchanges say savvy investors are playing the waiting game till the time government crypto regulations come into effect using Stablecoins.

“During bearish market phases, like the one we’re seeing currently, we see many experienced users liquidating their crypto holdings into Stablecoins to hedge their risks in real, CEO, BuyUcoin.

“Indian users are astute investors, and they change their holdings when markets are turbulent,” added Charles Tan, head of marketing at Coin store.

Exchanges that the most visible impact of the recent media reports was seen recently as new retail investors squared off their crypto purchases into fiat. However, as the global crypto markets turned bearish, exchanges recorded an increase in volumes of Crypto-Stablecoins pairs.

“Indian investors are not just hedging their currency risks but also earning interest at the same time as some exchanges offer products that allow you to lend your Stablecoins out,” said Gaurav Dahake, founder, Bitbns.

Stablecoins have been a major point of discussion through much of 2021. Especially the ones pegged to that the total supply of US dollar Stablecoins is now touching $140 billion. Market watchers say, unlike other crypto assets, Stablecoins have had steady demand since the spurt in crypto trading in India from 2020-21.

Experts also point out that in some cases; Stablecoins are also being used to launder money.

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