How Do Stablecoins Function as a Temporary “Quality” Asset during Extreme Market Stress?
Stablecoins, primarily USD-pegged ones like USDT or USDC, act as a safe haven for crypto-native capital. Traders sell volatile assets (BTC, altcoins) for stablecoins to "park" value and preserve capital without exiting the crypto ecosystem entirely.
This causes a temporary spike in stablecoin trading volume and often a slight premium above their dollar peg on non-USD pairs.
Glossar
Stablecoins
Peg ⎊ Stablecoins represent a class of cryptocurrencies engineered to maintain a stable value relative to a specified asset, typically a fiat currency like the US dollar.
Crypto Ecosystem
Resilience ⎊ The crypto ecosystem, particularly within the context of cryptocurrency derivatives and options trading, exhibits a complex interplay of factors influencing its ability to withstand and recover from shocks.
Volatile Assets
Exposure ⎊ Volatile assets, within cryptocurrency, options, and derivatives, represent instruments susceptible to rapid and substantial price fluctuations, demanding sophisticated risk quantification.