The first half of 2021 has been nothing short of a breakthrough for cryptocurrency — with regulatory talks, more institutional buy-ins from major companies, and fluctuations in prices, the crypto world has started to make huge waves.
For investors, it’s crucial to keep track of current crypto trends, as coins perform differently every day. Bitcoin, for instance, peaked at $64,895.22 last April, only to drop by 50% to around $32,601.00 in May. Unlike your typical cryptocurrencies like Bitcoin and Ether, stablecoins are usually a lot steadier. And while there were specific stablecoins that enjoyed all-time highs in August, there were some that unfortunately provided negligible returns.
In this article, we’ll be taking a look at the five worst performing stablecoins in 2021… so far.
USD Coin (USDC, -0.04%)
The USD Coin is an Ethereum-based stablecoin launched in September of 2018. Stablecoin cryptocurrencies are tied to fiat currency on the blockchain. In July, digital company Circle announced that the USD Coin was no longer backed by 1:1 actual dollars in a bank account. Instead, it is comprised of 60% of USD Coin’s reserves and 40% backed by various forms of debt securities and bonds. Changes such as this can drastically affect coin volatility.
Tether (USDT, 0.01%)
Similarly, Tether, the largest stablecoin with $75 billion in circulation, revealed earlier this year that 2.9% of its reserves were held in cash. This incited fear in investors as it is a form of unsecured, short-term debt that can be riskier than government bonds — and a sudden mass redemption of Tether tokens can destabilize the market. Additionally, China’s crackdown on crypto increased the demand for competing stablecoins over Tether’s own vulnerability. In August, however, Tether printing has recommenced after a two-month pause, and many are expecting USDT to rebound soon.
TrueUSD (TUSD, -0.04%)
TrueUSD is another stablecoin attempting to maintain its $1.00 value. Its supply is collateralized by US dollars bonded by banks. After being launched to a limited investor base in January of 2018, TrueUSD has now grown to incorporate almost $400 million of backed tokens as of October 2020. Like other stablecoins, it is geared towards larger investors looking to reduce risk. In July, TUSD joined forces with Signature Bank to enable 24/7 real-time minting and redemption services, promising holders smoother transactions even when the market is fluctuating.
TerraUSD (UST, -0.07%)
TerraUSD is the decentralized and algorithmic stablecoin on the Terra blockchain. This coin is a highly yield-bearing coin and has gained a reputation as the most scalable stablecoin. Native token for the Terra is called LUNA. LUNA tokens can be converted to Terra stablecoins and vice versa. Prices for newer cryptocurrencies like Terra can be quite volatile and can be prone to glitches as well.
Binance Coin (BNB, -0.02%)
Major banks began to ‘delist’ Binance in June and July — in August, HSBC banned UK customers from making further transactions with them. Furthermore, Binance US CEO Brian Brooks resigned after having recently acquired the position. Binance was already suffering due to a hacking incident from earlier this year, where $2.6 million was stolen from a customer’s account. The negative PR made August an extremely rough month for the coin.