Why are stable coins regarded as profitable investments?

By Sony T
6 Min Read
stablecoin

The crypto community would have been more interesting, but for the price volatility. One of the main reasons why most individuals are skeptical about investing in cryptocurrencies is the fluctuation in price of assets and the highs and lows. This price volatility has been branded many names like “Ponzi scheme” because some investors have bought some projects and lost. Hence, it’s advisable that you understand what the crypto community entails before investing. It might, however, interest you to note that even amidst this price volatility, some investors are still making a fortune out of the crypto community. There are several projects in the crypto community. One of them is stablecoins investment, which is one of the safest means of earning in the crypto community, although nothing is promised.

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Stablecoins are those assets with defined values. They are such that each coin has its value attributed to an external asset, such as gold, US dollars, euros, etc. The stability of stablecoins is one of the reasons why they are preferred to use in buying other crypto assets instead of using fiat. So, most times, you do not trade against a stable coin; instead, you use them in buying the less stable ones (altcoins).

What are utility assets?

Utility assets are those blockchain-based tokens you could have/store for future uses. Most stable coins are regarded as utility assets because their price remains the same over a long period. It’s safe to assume that stablecoins would stay a valuable utility asset compared to altcoins over a long time, considering both assets are subjected to time. The difference here is that altcoin could outperform stablecoin if and only if the project is promised to keep increasing without experiencing any dip.

What’s the difference between stable coins and altcoins?

As mentioned above, the cryptocurrency community is a very profitable one, depending on how well you can navigate it. There are some niches where you could become s millionaire in dollars in less than hours if you are willing to take the risk. On the other hand, if you want to play by the books, you should ensure you understand what you are getting into before making any investment, either altcoin or stablecoin investments. Here are, however, some of the differences between altcoin and stablecoin

Price volatility:

One significant difference between these two types of coin/investments is price volatility. In stablecoin investments or stablecoin cryptos like USDT, the price is stable compared to altcoins like Ethereum. The price of USDT (US dollars) hasn’t experienced a 2% increase since the beginning of the year, but Ethereum has experienced over a 50% increase. However, it is essential to note that these price differences could also be negative; in this case, the altcoin would have lost the accumulated profits while stablecoin remains somewhat unchanged. Hence, the reason for the significantly high price fluctuation in altcoins compared to stablecoins. Most altcoins have the capacity to increase exponentially and decrease the same way depending on the market forces.

Price prediction:

While it’s easier and more accurate to predict the price of a stablecoin over a given period, it’s impossible to achieve this with altcoins. Before now, 2021 was supposed to be the “altcoin season,” however, it only lasted the first two months of the year before the price fluctuation started and NFTs became a thing. Nonetheless, stablecoin, on the other hand, has maintained the predicted price and stayed stable, as the name implies. 

Why are stablecoins regarded as profitable investments?

No investor would want to count losses, or in this case, dwell on investments that would bring on more losses. Most times, it becomes preferable to earn a minimal amount of profit on investment than to take a huge risk and throw all the earnings in the well in minutes. So, most investors prefer stablecoin investments because it’s less affected by market forces, and if affected, it’s mainly on a very minimal scale compared to altcoins.

Having a stablecoin over five years becomes preferable to an altcoin investment of one month, which could end up in the drain a few days later. Since stablecoin brings more satisfaction to traders and is stress-free, it becomes the most preferred. The crypto community is volatile, it still doesn’t mean all crypto assets are volatile, and stablecoin investments are examples. Suppose you want to keep away from price volatility in the crypto community. In that case, you should probably consider investing in stablecoins, although it would definitely take a longer period for the profits to become tangible compared to altcoins.

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By Sony T
Sony is a passionate bloggers writes on Futuristic technologies ...
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