Welcome back,
In today's blog we will be talking about the Stable coins. We will learn about how normal people look stable coin as and how actually stable coins are also one of the reasons for big impacts seen in the crypto market today .
Stable Coins
As the name suggest, stable coins are coins that are known among the people for maintaining their stability in terms of price. No matter how much is the total supply available in the market these are the coins that stay stable unless and until their are a group of negative news about them.
Almost every reader here must have deal with these stable coins as they are the means via which people try to enter the crypto market. Be it any country, people exchange their national currencies for these stable coins and then they use it to buy any other crypto currency.
The rank #3 currency by market cap is itself a stable coin. USDT can be seen at that rank and it has infinite maximum supply. This is really an interesting thing about these stable coins that though their supply don't has a limit still they manage to stay stable. Other examples of stable coins are USDC, BUSD, TUSD, etc.
How are people using these stable coins
I will try to make this part small. So stable coins are stable in price but still it is one of those token that people use to earn profit on a daily basis. There are various P2P market where people who want to buy them can buy it and that is where the game comes in.
There are people who are able to buy these stable coins at lower price and sell at higher prices in the same day. There are people who still don't have proper knowledge of how the P2P market works and that is why they are ready to pay extra or sometimes they are simply unaware about the market price of those stable coins and they end up paying the higher amount for these stable coins.
How are stable coins important for the Crypto market?
Now this is the section about which everyone might not be aware of. Everything that i talked about until now was very basic knowledge, the knowledge that everyone should be aware of but what we are going to discuss now is the information that will help people understand how the market is being effected by these stable coins.
Whenever there is a huge amount of crypto floating from one place to another, it is noted and shared by different organisations and crypto firms as they are always having a track of these movements. Few days back SOL worth millions of dollars was sent from a wallet to an exchange and this movement decides the future of that currency.
Now there can be two things that can come in people's mind by seeing these movements. First is that the person/organisation with so much holding will going to sell all those tokens while the other side of the picture can be that the person/ oraganisation is just creating a FUD among people to manipulate the market.
When it comes to Stable coins there are two movements that are really important. The one is when someone starts moving these stable coins out of the market and the second scenario is when huge amount of stable coins enters the market. There are actually various possibilities for these stable coin movements but we will talk about few of the most obvious reasons why these movements happen and how they effect the market.
So whenever the stable coins are being taken out of the market then it means that whales are on the neutral mode and we generally see this happening when there are crashes in the market, in common words when we see the term blood bath being used for the crypto market. Here, common people thinks that the market might die as people are moving their money out of the market.
Second scenario is the scenario that is being seen in last two weeks. There was a huge amount of stable coins that was unlocked and also being moved from private wallets to the exchnages. Here, people see it positively as when stable coins enters the market then there is a possibility that those stable coins will be used to buy crypto and that will help the market move in the upward direction.
In last few days we saw some similar examples where a whale was buying huge amounts of eth making a surge of 1.5-3% in ethereum price if i am not wrong. So as stable coins are entering the market we all can see it as a positive move as all these stable coins have a poor APR and on the other side crypto available in the market are having good APR.
As market moves in the upward direction it is best to convert stable coins to well performing crypto and then stake it to earn a good APR plus if the price of that coin goes up the APR will see improvement as well. For example if the coin pumps by 5x, the APR will roughly be 5X as well as the amount someone was earning would have become 5X.
Conclusion
To conclude, i will like to say that stable coins are one of the important tokens available in the market and it is the means through which common people enters into the market but on the other hand these stable coins has more to do with market as we shared in this blog already.
We learnt how they impact the market or how they are capable of impacting the market by monitoring the movements of these stable coins being made by whales.
I hope every person here now has a better knowledge about these stable coins and that they must have learnt something new. I will now like to end writing this blog.
Thank you and Happy trading everyone!