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Stablecoins have benefitted from the selloff in cryptocurrency tokens that started last year, as market users look for leverage to specular on other assets.
Source: Bloomberg
BTC is up 2.82%, ETH up 2.80%, USDT flat, and USDC up 0.11%.
Major cryptocurrencies have fallen by at least 36% from their record levels, while stablecoins pegged to other assets have continued to post gains. Tether has hit a market capitalization of $78.5 billion, while USD Coin climbed to the fifth spot at $44 billion.
Analysts believe the appetite for stablecoins is driven by investor appetite for juicy yields, with market participants looking to use them as leverage to speculate on other assets. Lenders can earn up to 19% for fully collateralized loans.
Analysts also noted that volatile market periods usually make the lending of stablecoins much more attractive for market participants than investing in major tokens such as Bitcoin.
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