Despite the positive market sentiment, investors and traders can invest in stablecoins in the near future.
Observers note that leading cryptocurrencies continue to rise on fundamental factors. For Ethereum, this is the upcoming CME futures launch. For bitcoin, the beginning movement towards political stability in the USA, as well as the so-called “Elon Musk factor” are positive.
The Musk Factor is a consideration of the obvious impact of technological genius on the crypto market. Musk was joking at first when he promoted the playful Dogecoin (DOGE) cryptocurrency. But lately, his posts have become seriously positive. It was noted that after Elon Musk added the #Bitcoin tag to his profile, BTC grew up by 20%. Musk has also taken a closer look at altcoins and stated on Twitter that DeFi projects could replace existing fiat financial services. Perhaps it was this reasoning that led to the growth of popular tokens from among the decentralized finance.
An important factor in the growth of the market was the announcement of the VISA payment system that it will add an API this year so that banks can provide their customers with an easy purchase of cryptocurrencies. As a result, the crypto market has renewed its all-time high above $1.175 trillion. The daily trading volume increased to $160 billion. The largest contribution to the total market capitalization is still made by bitcoin and Ethereum (ETH), but the share of altcoins is constantly growing.
However, experienced players assume that after this optimism in the market, a correction will occur, and it is possible that for a long time. Therefore, there is an increase in purchases of stablecoins, which are considered as a defensive asset. It is generally accepted in the crypto community that stablecoins are not even cryptocurrencies, but simply tokenized fiat currencies. These are mainly centralized tokens backed by the US dollar. Typically, stablecoins are issued by exchanges, including Bitfinex (USDT), Coinbase (USDC), Gemini (GUSD), Binance (BUSD), and others.
A new stage in the development of stablecoins is the trend towards the digital currencies of central banks launching (CBDC). The successful testing of the digital yuan by China made a lot of noise. The European Union has also scheduled a digital euro launch this year. And at the Forum in Davos this year, it was announced that the launch of CBDC is the most important issue on the global finance agenda.
There is one more factor that makes the crypto community take a closer look at stablecoins. In February, Mark Zuckerberg promised to launch the Facebook cryptocurrency Diem (formerly called Libra). Diem-Libra is a stablecoin pegged to a basket of world currencies. So it may prove to be the most stable of all stablecoins, and achieve a large capitalization very quickly due to the huge user base of Facebook.