07 Dec 2021

Stablecoins traded at premiums during the bitcoin sell-off

As usual, when we see a market crash, traders seek refuge in stablecoins – the safe-haven assets of crypto.
Source: TradingView (Coinbase)
Traders in the crypto markets view stablecoins as a risk-off asset since they are pegged to the US Dollar or other fiat currencies. When traders look to take chips off the table, they sell their crypto for stablecoins.Stablecoins typically trade very closely to their peg, but in extreme events such as the recent sell-off, the high buying pressure can make the prices of stablecoins fluctuate to levels way above the peg.An example is on May 12th. When bitcoin crashed 15%, the Tether briefly traded at a premium of 10% on Coinbase.On Saturday, as traders were desperate to get out of a plummeting crypto market, Tether, the largest stablecoin by market cap, traded at a 1.3% premium relative to its peg at Coinbase.During the days following the market crash, the Tether premium is still laying above what it did before the crash, suggesting that traders are still wary.
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