Bitcoin dropped to $38,300 early Monday as renewed coronavirus outbreak in China threatened to worsen the high inflation-low growth situation facing the global economy.
That was expected, given the implied volatility looked cheap compared to its historical standards and lifetime average.
That’s well below the nearly $50 billion total for Circle’s USDC, or the $82 billion worth of Tether’s USDT roaming the Earth.
Stablecoins were first created to give active crypto traders a tool for moving quickly between more volatile positions, though as we’ll see, the potential for big interest rates on loans has also helped attract capital.
USDT and USDC are so-called “backed” or collateralized stablecoins.
Circle and Tether are run by centralized corporate entities with the ability to blacklist users and even seize their funds.
In principle, algorithmic stablecoins like UST don’t have this censorship risk because they are not run by centralized corporate structures and do not hold backing in traditional institutions like banks.
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