A report published by S&P Global concludes that stablecoins are more volatile than pegged fiat currencies. The report published today, ‘A Deep Dive Into Crypto Valuation‘, is timely given that this is one of crypto’s more volatile weeks of late, following the FTX exchange‘s need for a bailout. The paper mainly explores volatility and compares digital assets such as Bitcoin to other cryptocurrencies, large cap stocks and gold.
S&P Global compares three dollar-pegged stablecoins, Tether, USDC and DAI, and the Hong Kong Dollar (HKD), a fiat currency also pegged to the U.S. dollar. The HKD is significantly less volatile.
The comparison shows that the DAI was highly volatile a couple of years ago, but that has since declined, and of late, it is more stable than Tether. That’s because the DAI was previously mainly backed by cryptocurrencies such as ETH, which now only makes up a small proportion of reserves. Instead, the majority of current reserves are other stablecoins, especially USDC.
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