New post
John Wang
in
Crypto
April 23 12:00

Stablecoins do not inflate prices, research claim

Arbitrage trading is to blame.
36
2
Сhief of innovation at U.C Berkley Richard Lyons and the assistant professor of finance of the Warwick Business School Ganesh Viswanath-Natraj have published the report on stablecoins. According to their research, stablecoins do not contribute to the price inflation on the crypto market.
The researchers claim to have found “strong evidence” that traders use stablecoins as a way to react and adapt to market swings. They also found another strong catalyst that trigger flows from treasuries to the secondary markets - arbitrage trading, which is especially effective in times when stablecoins stray noticeably from their pegs.
The consensus on the market is - or was - that stablecoins are issued during the big downturns and lead to BTC prices spike. This idea is based on 2018 research by Amin Shams and John Griffins. 
Their publication even led to an investigation by the US Department of Justice of Tether and Bitfinex on the possibility of using the stablecoins for BTC value inflation. In 2019, a class-action lawsuit has been launched. Exchanges were accused of the attempts to monopolize the market.