Title: On the role of stablecoins in the cryptoassets pricing dynamics
Authors: Ladislav Kristoufek - Institute of Information Theory and Automation, Czech Academy of Sciences (Czech Republic) [presenting]
Abstract: Stablecoins, usually represented by and associated with the dominant Tether (USDT) token, have evolved into an important clock-piece of the whole cryptoassets system. Their main objective is to enable easy transactions between cryptoasset exchanges with a stable exchange rate mostly through pegging to and being backed by a fiat currency or a physical asset. The backing itself has become a controversial topic for the most dominant stablecoin and its role in the 2017 skyrocketing cryptoassets prices has attracted a lot of speculations in the community. However, the research interest into the stablecoins and their role in the cryptoassets price dynamics has been rather scarce. Here we provide a detailed analysis of interactions and dynamics between the set of 28 stablecoins, Bitcoin as the most dominant cryptoasset, and altcoins to examine whether the stablecoins in fact induce the price movements or not. We provide evidence that the stablecoins mostly reflect an increasing demand for investing in cryptoassets rather than serve as a boosting mechanism for the periods of extreme appreciation. We further discuss some specificities of 2017, even though the general dynamic patterns remain very similar to the general behavior. Overall, we do not find support for various scandalous claims about the stablecoins.