Stablecoins barely grew in December amid bear market

Cryptocurrencies are often criticized for being air-based. But one of the most important properties of many tokens is that they have a limited number. Stablecoins proved that last December. Almost no stablecoins were created last month.

Stablecoins barely grew in December

Stablecoin Printer stated this on Twitter last Sunday. A check via CoinGecko shows that the market value of Tethers USDTCircles USDC and Trust Tokens TrueUSD (TUSD) last month remained virtually the same.

Binance USD (BUSD) has actually shrunk by 27%, from about $22 billion to about $16 billion. This contraction appears to have been caused by people withdrawing USDC from Binance in large numbers. As a result, the required BUSD was automatically converted into USDC.

Stablecoins work hard to show they are trustworthy. Some went to zero last year, and even more coins lost their link to the underlying. The reason was often that the collateral held by these stablecoins was volatile and has fallen in value this year. As a result, the collateral was no longer enough to cover the market value.

Therefore, it is no wonder that the number of outstanding tokens has stopped increasing. The market apparently no longer has the money to allow these stablecoins to rise in market value. It could also be that the need to buy stablecoins with ‘real’ fiat money is less great.

Stablecoins are important in crypto

The principle of the stablecoin is very important in crypto. For starters, it allows you to hold something of stable value without needing the banking system. Last summer, the market reached its highest market value ever.

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But many of these coins were not stable in the past year. First, the Terra ecosystem (LUNA), which was built for stablecoins, collapsed. This made even Tether’s USDT stablecoin unstable. This strengthened the bear market, after which the market for stablecoins also contracted sharply.

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