Whether talking about bitcoins or binance coins, these cryptocurrencies are considered volatile. So, what exactly do we mean by the volatility of a currency?
A currency is volatile only when the price movements are unexpected and highly unstable.
 |
| Here Are The Top Reasons Why Stablecoins Are Becoming Popular: eAskme |
For example, if the price of bitcoin is about $400 at 8 AM, its price may increase to $700 by 9 AM.
There is no way a trader can know the exact price at a particular instance on a specific day. That’s why the market is termed volatile.
Now comes the concept of stablecoins.
As the name suggests, you can understand that these currencies have stable prices fixed regarding the top fiat currencies like US dollars, Euros, Pounds, and AUD.
Over the years, stablecoins have become quite popular, and you can trade them on almost all the exchanges like the bitcoin kiwi system.
Bearing this in mind, we have discussed some of the main reasons while explaining the growth of stablecoins in 2024.
Comparable rates with fiat currencies:
Usually, cryptocurrencies are much more different than fiat currencies.
The valuation of one crypto is more than the fiat currency pair values.
You need to spend handsome money to buy one bitcoin, let alone a bunch which is quite a challenge.
But with the introduction of stablecoins, their prices are comparable to the fiat currencies.
It means that the crypto will have the same valuation as the fiat currency.
Its price won’t change much, and therefore, you don’t have to worry about investing in these currencies.
Negligible volatility:
The price of the stablecoins is fixed, and it is not subjected to constant price movements, be it in the forward or backward direction.
As a result, the extent of volatility is almost negligible.
You won’t have to be wary of the trades going in your favor or against you.
Therefore, there is no need to constantly keep an eye on your trade positions and plan to forecast the price movements throughout the day,
Reduced risks or losses:
With little volatility of the stablecoins, a huge limit will reduce the risks or chances of loss.
Therefore, neither will you lose millions nor suffer huge losses.
However, it is not true that the trading risks are zero because there will be chances of making a bad deal.
So, be careful when trading with both crypto and stable currencies.
Increase in profits over time:
When the price of volatile cryptocurrencies starts to decrease, people usually sell the assets to ensure that they don’t suffer losses.
However, this action is one of the biggest mistakes because this decision is always taken during FOMO.
If you use stablecoins, you will do just the opposite and increase your profit.
As these currencies have a stable price, you can buy them even when the price is falling closer to the safest threshold level.
Used in financial transactions:
According to several reports, stablecoins represent a digital form of fiat currencies.
As a result, they can form a new way of processing financial transactions like taking loans, investing in mutual funds, making savings or deposits, etc.
This isn’t possible much with the volatile cryptocurrencies, so stable coins are becoming popular.
Stablecoins in 2024- What Is The Future of Stablecoins?
Several stablecoins have already been launched in the market.
If you are a beginner trader or want to avoid the trade risks, it would be best to go with stablecoins.
Below mentioned are some of the cryptocurrencies that have been deemed stable and can be used for profitable transactions.
- Since The US government controls rope, you need to spend $1 only to buy one coin.
- Binance is also a popular stablecoin with its blockchain. It has a trade to value ratio of 51.8%, so trading in it will be more profitable.
- TerraUSD will make a firm position in 2024, thanks to its lower valuation and the limitless availability of the currency.
Conclusion:
Now that you know why stablecoins are so popular, it’s time to learn more about them, the market cap valuation, the price movements, etc.
You May Also Like These;
