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by capableweb
1199 days ago
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> USDC and other "stable coins" are risky, noisy and generally bad medium to long term investments. Unlike domestic currency they have such small trading volumes that they are easy to manipulate How are you supposed to manipulate a currency pegged to the USD? It'll fluctuate a bit above or below, but not by much except in extreme cases. And even in those extreme cases, it seems like the peg gets restored eventually. Talking mainly about USDC, USDT and DAI here, as those have all been "depegged" and subsequently restored their peg afterwards. |
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To keep a peg you have to "defend" the value of said pegged monetry instrument.
That means when the value drops below the peg, the "owner" has to buy back the "currency" at a high enough value to keep in within the peg. They have to crash liquidate possibly long term investments, or use a credit facility. This is expensive.
As you know, the value of traded things is defined by the current buy/sell price. If you are only trading a few thousand times a day, those people who trade have much more power. All it takes is a few million, and you can trade between a few accounts effectively setting the price of the market.