How stable are stablecoins?

By L. Hoang, Dirk G. Baur. Social Science Research Network, 2021

110 citations recorded by the source corpus.

This paper analyzes the stability of stablecoins and proposes a framework to test for absolute and relative stability of stablecoins. Based on high-frequency data, we find strong evidence of excess price variations. While Bitcoin is a likely source of this excess volatility because stablecoin returns, volatility and volumes are highly correlated with corresponding Bitcoin time-series, we also demonstrate through a quasi-natural experiment that stablecoins increase the trading volume of Bitcoin. The findings suggest stablecoins play a key role in cryptocurrency markets. GRAPHICAL ABSTRACT

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/6af689d6d7a37cc8dc24f583acb3a6b58491fdde