Which stablecoins were actually `stable` during this week`s sudden Bitcoin price crash?

A sharp sell-off in the cryptocurrency market on Tuesday – which saw top tokens like Bitcoin (BTC), Ether (ETH), Cardano (ADA) and Solana (SOL) drop by double digital percentages – created an area for stablecoins to prove. their value.

Fixed-price cryptocurrencies have provided traders with temporary protection from the notorious crypto price volatility. They did this by maintaining almost a dollar rate and offering sufficient liquidity to traders looking for a safety net during the market downturn.

Blockchain analytics service CryptoQuant reported dramatic increases in stablecoin transfers on Tuesday as the cryptocurrency market cap fell from $2.38 trillion to $2.103 trillion.

For example, Tether, the leading stablecoin by volume, traded $10.51 billion on Tuesday compared to $4.02 billion on Monday.

Similarly, the second-largest stablecoin USDC, backed by Circle, reported $5.728 billion worth of transfers on Tuesday, up 74% from $3.27 billion in the previous session.

At the same time, the net supply of stablecoins in circulation remained relatively dormant at around $67 billion, showing sufficient liquidity to counter demand even in the face of a brutal crypto market crash. As a result, many major stablecoins maintained their $1:1 stablecoins despite posting minor price slides.

Centralized stablecoin more reliable
Six centralized, two hash and two algorithmic projects were among the top 10 stablecoins that showed a minimum average deviation from their one-dollar pegs.

USDC demand increased its average valuation to about $0.00196 a dollar, followed by Paxos (PAX), which traded $0.00203 above the same constant.

Similarly, Binance exchange's native stablecoin BUSD and MakerDAO's DAI Collateralized Debt Positions (CDP) maintain their stability through a diverse dynamic system of autonomous feedback mechanisms and user incentive structures, up to $0.00244 from its dollar peg.

Tether's broader demand across the cryptocurrency spectrum also pushed its average deviation by as much as $0.00244.

Related: Tether promises an audit in 'months' as Paxos claims USDT is not a true stablecoin

Meanwhile, TrustToken's TUSD, Stable Universal's HUSD, and Terra's UST fell $0.00249-0.0385 from dollar valuation. FRAX and FEI were decoupled from dollar constants by going above $0.00404 and $0.00474, respectively.

The data snapshot was taken 24 hours after the September 7 crypto market crash.

Is the stablecoin crash good for Bitcoin?
But potential stablecoin risks have also caught the attention of senior US officials, including Treasury Secretary Janet Yellen and Boston Federal Reserve Chairman Eric Rosengren.

In July, Yellen, during a meeting with the heads of the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the U.S. Department of State, “underlined the need to act quickly to ensure that an appropriate U.S. regulatory framework is in place.” Currency Controller and Federal Deposit Insurance Corporation.

Related: Stablecoin growth could affect credit markets, rating agency warns

Source: cointelegraph.com