5 Reasons Investors Need Stablecoins

Stablecoins are essential for investors because they offer a number of interesting benefits.

The stablecoins are crypto-currencies that, as their name suggests, are stable or relatively stable, at least since they are directly indexed on the fiduciary currency. In December 2021, they represent more than 6% of the capitalization of all cryptocurrencies. But why are these stablecoins so popular among crypto investors?

Stablecoins are essential for investors

When we think of cryptocurrency, we immediately think of volatility. If this is a joy for speculators, then this is a problem, or at least a source of concern for investors, when we know that this change can reach tens of percent very quickly. Because stablecoins are indexed to fiat currencies, commodities, or other cryptocurrencies, they are significantly more stable. In a portfolio, they allow value to be retained and value added to be generated. That is why they are very popular with investors.

As a direct consequence of this stability, the stablecoins in the portfolio are a source of immediate liquidity. This is a central element of an investment strategy and is essential to getting started with cryptocurrencies with almost complete peace of mind. As such, the savvy investor often sacrifices their exposure to volatility to bet more stablecoins in order to be able to buy when the opportunity arises.

because they offer a number of interesting benefits

Decentralized finance (DeFi) is an important aspect of the blockchain. But DeFi services are directly affected by the volatility of cryptocurrencies. Due to their stability, stablecoins allow users to use lower-risk solutions to generate very interesting passive income.

As already mentioned, the principle of a stablecoin is to remain relatively stable. There are three main principles for this: be backed by fiat currency (UDST, UDSC), be backed by commodities (XAUT, PAXG) or backed by other cryptocurrencies (DAI) or stabilized by an algorithm (UST). Thus, holding stablecoins gives you access to these currencies or their commodities with the benefits of blockchain. A good knowledge of these markets will be very helpful.

The last interesting point of stablecoins is the capital gains tax. In France, you must pay tax when transferring cryptocurrencies for fiat currency, goods or services. Transactions between cryptocurrencies, including stablecoins, are tax-free regardless of the amount. In fact, stablecoins are a form of tax niche in the cryptocurrency ecosystem where investors can enjoy all the benefits mentioned above without the administrative burden of trading in fiat currencies, goods or services.