The stability of these token yields offers a respite from the constant barrage of volatility hitting the market recently.
The crypto-market has experienced negative price swings in recent times as FUD begins to spread. Many people have incurred losses due to market volatility, which has been caused by a variety of factors. Stablecoins present an alternative for the risk-shy crypto investor, and are seeing increased yield optimization as more users flock to more secure asset farming.
Why People Are Feeling Nervous
Cryptocurrencies have again displayed that notorious quality for which they are well known: volatility. It all started as a little drop in the price of cryptocurrency’s king, Bitcoin. Soon, other cryptocurrencies began dropping in value as well. As is often said by crypto enthusiasts, “buy the dip” – but this time that advice may have been premature. Those who bought the dip saw the dip go deeper until the entire market took a plunge.
What Was Behind The Latest Crash?
Late last year, American billionaire investor Elon Musk openly tweeted in support of Bitcoin. The billionaire’s company Tesla bought $1.5 billion worth of Bitcoin and laid out plans to receive bitcoin as payment for cars manufactured by the company. That move helped see Bitcoin rise to its all-time high.
A sudden reversal happened, however, when Elon went on Twitter again and announced that Tesla would no longer be eligible to be bought with bitcoin, arguing that bitcoin mining degrades the environment.
On the heels of Elon Musk’s sudden reverse, China reiterated its earlier clampdown on Bitcoin and other cryptocurrencies. China’s move worsened the already shaky situation and eventually plunged the entire market into a downward spiral.
In the midst of the correction the market is going through, is there any respite for investors?
Stablecoin Yields Are A Veritable Investment Option
Many crypto advisors, such as Binance CEO Changpeng Zhao, have strongly suggested that holding is the best option for investors during the current dip.
Holding cryptocurrencies in the hope that they will appreciate in value is not a bad idea altogether. The issue is just that one may have to contend with volatility every now and then, which appears to eat away any progress made.
As the market bleeds, some stablecoin yield-optimizing platforms have used the opportunity to encourage investors to consider stablecoins as an investment option, which offer far less volatility than other currencies. This doesn’t mean they can’t enjoy the same benefits as other tokens, however.
According to Beefy.Finance, stablecoin vaults on their platform can bring in reasonable returns with APYs as high as 50%.
Why Do Stablecoins Deserve Your Attention?
Like the name, the value of a stablecoin is virtually always consistent. Most stablecoins are pegged to the value of the American dollar. The more common methods used in maintaining the peg is by a physical dollar backing in a treasury or an algorithm. Thus, whenever volatility hits the general crypto market, stablecoins remain stable despite heavy fluctuation surrounding them.
On that basis, platforms such as Beefy and AutoFarm that optimize yields with reasonable APY may deserve a crypto-investor’s attention. This will be especially promising for an investor who wants to avoid the shock of volatility and still earn good returns.
Volatility is a fundamental characteristic of cryptocurrencies. As we have seen in the past few days, crypto prices can massively be influenced by notable people or major news.
Stablecoins are usually immune to the sort of volatility that crypto is generally associated with. For the crypto-savvy investor who wants to earn good returns while avoiding risks of volatility-induced losses, stablecoin yield-optimizing platforms with good APYs such as Beefy.Finance or AutoFarm may be a good investment idea.
Learn More: We previously published this piece with further insight on how you can earn high yields by farming stablecoins.
Source : bsc.news
Founded in 2020, BSCNews is the leading media platform covering decentralized finance (DeFi) on the Binance Smart Chain (BSC). We cover a wide range of blockchain news revolving mainly around the DeFi sector of the crypto markets. BSCNews aims to inform, educate and share information with the global investment community through our website, social media, newsletters, podcasts, research, and live ask me anything (AMA). Our content reaches hundreds of thousands of global investors who are active in the BSC DeFi space.