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Stablecoins Provide Cover as Global Risks and Uncertainty Quake

Stablecoins Provide Cover as Global Risks and Uncertainty Quake

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4 years ago

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As the global economy trembles, investors continue to find sanctuary in stablecoins, which have increased their market cap dramatically.

As the global economy trembles, investors continue to find sanctuary in stablecoins. In the most recent 12-month period (ending April 29, 2020), the three top stablecoins — Tether (USDT), Circle (USDC) and Paxos (PAX) — increased their market capitalization by 161%, 191% and 146%, respectively.

Kim Grauer, head of research at Chainalysis, told Cointelegraph that with the use of a different metric, “We can confirm a 250% increase in the amount of Tether moved on-chain in the past 12-months (ending March 2020),” and the growth isn’t all front-loaded, either. 

As COVID-19 raged, President Trump declared a national emergency in the United States on March 13, and for that month, the three largest stablecoins each notched month-on-month on-chain growth of 50% or higher. 

Elsewhere, on March 10, Binance’s new stablecoin (BUSD), created in partnership with Paxos Trust company, crossed the $100 million market cap threshold for the first time since its September debut. Dramatic growth continued through April. On April 29, BUSD’s market cap stood at $194 million, trailing only USDT ($7.52 billion), USDC ($726 million) and PAX ($244 million).  

Talking to Cointelegraph, Binance chief compliance officer Samuel Lim shed some light on the likely causes of such growth. “Stablecoins have been used more frequently in trading due to huge market volatility in the past year,” he said, “but apart from that, we have also seen an increase in its public adoption and usage.” In reference to Tether’s growth in particular, Lim added: 

“The issuance of USDT has increased greatly, but its market share is gradually decreasing, which means other stablecoins have been growing phenomenally — not to mention that it [USDT] may face potential competition from CBDCs [central bank digital currencies] or even the likes of Libra.”

Not so surprising

Are other industry representatives confounded by the continued growth? “It’s not surprising to me,” Cred CEO Dan Schatt told Cointelegraph, “we’ll see more of this, with the current state of the financial markets. There is a strong interest in the dollar, and it’s much easier to acquire dollars through crypto assets.”

COVID-19 has done nothing to disrupt stablecoins’ advance on non-pegged digital coins (i.e., non-stablecoin crypto). “Compared to the top 5 non-stablecoin assets (BTC, ETH, LTC, BCH, and XRP), the stablecoins we track saw higher month-over-month growth from February to March in terms of on-chain transaction volume,” Grauer told Cointelegraph. She elaborated, “The flight to stablecoins suggests that people may be deliberately looking to store value in traditional fiat assets, namely the USD.” Adding to this sentiment, Gregory Klumov, CEO of Stasis, which issues the EURS stablecoin, told Cointelegraph:

“You can track the outstanding circulating amount of issued stablecoins, and during the first wave of a crypto market correction in early March, there was a significant issuance of stablecoins. That’s exactly the outcome that is expected: people were relocating to stablecoins, reducing the volatility of their crypto portfolio.”

A flight to safety is one common explanation. But there may be other considerations amid the coronavirus pandemic, some even hygienic, as Klumov went on to add, “People may start treating things they touch differently. For example, they will prefer to make digital payments and perform cashless interaction.” This is a significant trend for stablecoins in his view. Users can download crypto wallet apps and “get a checking account in dollars or euros by receiving and sending the same stablecoins.”

Asked to explain the recent stablecoin upsurge, Preston Byrne, partner at law firm Anderson Kill, told Cointelegraph, “It’s because people want dollars, and stablecoins are one form of exposure to dollars in places that don’t have direct access to the U.S. banking system or the means of holding physical cash.” Not all stablecoins are created equally, though, “There are really two different types of stablecoins: audited schemes, like Paxos and Circle, and unaudited ones like Tether,” Byrne said, adding:

“Paxos and Circle have likely seen increased adoption by market participants looking for a crypto-native alternative to ACH [automated clearing house] to make payments and settle debts, or simply a quick and easy way to convert crypto to USD. Tether’s market cap has ballooned to the stratosphere, but until Tether passes an audit conducted by a reputable firm, prudence dictates that I can’t believe their numbers.”

Byrne has been critical of stablecoins in the past, especially crypto-collateralized stablecoins (such as DAI), which he once described as “the perpetual motion machines of modern finance.” He also wrote, “A stablecoin that is collateralized by itself is a complex and fragile ‘Nakamoto Scheme’ doomed to fail.” Asked about this, Byrne said, “Stablecoins that fail to do those things or which cut corners on regulatory compliance are a bad idea,” further sharing with Cointelegraph:

“DAI faces numerous compliance challenges, starting with money services business licensing and continuing to a total lack of investor protections, as seen in recent events where DAI CDP [collateralized debt position] holders got wiped out due to a black swan drop in the price of Ether and network failure. That wouldn’t happen with a Paxos or a Gemini.”

For the record, DAI’s market capitalization increased by 38% over the past 12 months, which would be enviable growth under most circumstances, though it now pales beside the increases exceeding 140% notched by the top three stablecoins over the same period. 

Moreover, Alex Melikhov, CEO of Equilibrium — which issues EOSDT, a decentralized stablecoin — told Cointelegraph that centralized stablecoins like Tether, USDC and PAX have their own black swan risks. The banks that hold their currency’s cash reserves could fail. Decentralized stablecoins, by comparison, are transparently backed by cryptocurrency that is sitting in smart contracts. 

Melikhov added, “These stablecoins are dependent only on the [underlying] technology and its embedded algorithms. They are free from third-party risk and may be even safer than their centralized analogs.” Tether, of course, remains the gorilla in the room, with a market cap more than eight times that of the number two stablecoin. Regarding Tether, Grauer noted: 

“We see interesting technical and economic trends that may be related to this surge. Technically, most of the growth in Tether activity can be attributed to Tether on the Ethereum blockchain. In March 2020, over 90% of Tether transactions were settled on the Ethereum blockchain whereas just under 19% were settled there in April 2019.”

She added that 65% of Tether value was transferred in transactions that were over $100,000 each. “This confirms some speculation that a large source of the demand for Tether likely comes from professionals, probably based in China, where there is no fiat available to onramp into the crypto market.” Approximately 50% of Tether’s activity in March was sourced directly to China-based exchanges Huobi and OKEX, added Grauer, while Binance sourced nearly 30% of the Tether present on the Ethereum blockchain.

Could regulations stifle growth?

What, if anything, could derail stablecoin growth? “Most of the Tether demand is coming from the Asia region,” continued Grauer, “so a future regulatory crackdown could be felt by stablecoin users. But we have seen a resilience to these types of moves in the APAC region.” When the Chinese government banned the use of yuan for crypto purchases, for instance, many users simply shifted to Tether. On the matter, Lim believes that:

“Either way we believe they [i.e., stable and non-stable coins] can coexist, as their target audience might even be different. And needless to say, the crypto market is still very small when compared to the traditional fiat market. All it takes is for a small percentage of the flow of funds from the traditional world to enter this space and we will see a tremendous explosion of growth and adoption in our industry.”

Schatt added that more stablecoins are now emerging with higher standards and that are truly substantiated 1:1 with auditable transparency pages. He went on to say, “Those that cannot obtain a certain level of liquidity, transparency and auditability will be more susceptible to market crashes.” 

Speaking hypothetically, Melikhov believes that a failure of Tether could still have a drastic impact on the crypto sphere, “but the stablecoins market is slowly becoming more diversified as existing Tether alternatives become more mature.” In the future, a major stablecoin failure could simply result in the rise of an alternative stablecoin project — that is, one to take its place, he suggested. 

Looking ahead

Should the current run continue, can the stablecoins’ collective market capitalization eventually surpass that of Bitcoin, currently at $165 billion? “It’s possible,” said Schatt, “as we are already seeing more use cases for stablecoins — settlement of M&A and POS transactions. Connecting stablecoins to the several trillion dollar retail commerce market can significantly light up the prospect for stablecoins.” Lim, on the other hand, told Cointelegraph that “It is too early to tell,” adding: 

“Stablecoins are a bridge between the traditional fiat world and the crypto world, and we are all aware the fiat world is significantly larger. There is certainly room for growth within the stablecoins space and we strongly believe demand will only grow larger as institutional interest begins to pick up.”

There is only a finite supply of Bitcoin, too — a restriction not imposed on stablecoins. Market cap, of course, has its limitations as a measure of size or success, especially if governments enter the stablecoin arena. “If China or the U.S. create their own stablecoin, you will see how it is easy for them to overcome the market capitalization of Bitcoin,” Paolo Ardoino, chief technical officer at Bitfinex exchange, told Cointelegraph. 

“It is probably more meaningful to look at the amount of on-chain activity that we see, and right now stablecoins account for less than half of the activity of Bitcoin,” suggested Grauer. In any event, “the success of stablecoins and the success of other cryptocurrencies are not separate stories; they support each other,”she said.

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Comments on February Employment Report

The headline jobs number in the February employment report was above expectations; however, December and January payrolls were revised down by 167,000 combined.   The participation rate was unchanged, the employment population ratio decreased, and the …

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43 mins ago

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March 8, 2024

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The headline jobs number in the February employment report was above expectations; however, December and January payrolls were revised down by 167,000 combined.   The participation rate was unchanged, the employment population ratio decreased, and the unemployment rate was increased to 3.9%.

Leisure and hospitality gained 58 thousand jobs in February.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 17 thousand jobs since February 2020.  So, leisure and hospitality has now essentially added back all of the jobs lost in March and April 2020. 

Construction employment increased 23 thousand and is now 547 thousand above the pre-pandemic level. 

Manufacturing employment decreased 4 thousand jobs and is now 184 thousand above the pre-pandemic level.


Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in February to 83.5% from 83.3% in January, and the 25 to 54 employment population ratio increased to 80.7% from 80.6% the previous month.

Both are above pre-pandemic levels.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.3% YoY in February.   

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons, at 4.4 million, changed little in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in February to 4.36 million from 4.42 million in February. This is slightly above pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.3% from 7.2% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.203 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.277 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is close to pre-pandemic levels.

Job Streak

Through February 2024, the employment report indicated positive job growth for 38 consecutive months, putting the current streak in 5th place of the longest job streaks in US history (since 1939).

Headline Jobs, Top 10 Streaks
Year EndedStreak, Months
12019100
2199048
3200746
4197945
52024138
6 tie194333
6 tie198633
6 tie200033
9196729
10199525
1Currrent Streak

Summary:

The headline monthly jobs number was above consensus expectations; however, December and January payrolls were revised down by 167,000 combined.  The participation rate was unchanged, the employment population ratio decreased, and the unemployment rate was increased to 3.9%.  Another solid report.

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Immune cells can adapt to invading pathogens, deciding whether to fight now or prepare for the next battle

When faced with a threat, T cells have the decision-making flexibility to both clear out the pathogen now and ready themselves for a future encounter.

Published

44 mins ago

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March 8, 2024

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Understanding the flexibility of T cell memory can lead to improved vaccines and immunotherapies. Juan Gaertner/Science Photo Library via Getty Images

How does your immune system decide between fighting invading pathogens now or preparing to fight them in the future? Turns out, it can change its mind.

Every person has 10 million to 100 million unique T cells that have a critical job in the immune system: patrolling the body for invading pathogens or cancerous cells to eliminate. Each of these T cells has a unique receptor that allows it to recognize foreign proteins on the surface of infected or cancerous cells. When the right T cell encounters the right protein, it rapidly forms many copies of itself to destroy the offending pathogen.

Diagram depicting a helper T cell differentiating into either a memory T cell or an effector T cell after exposure to an antigen
T cells can differentiate into different subtypes of cells after coming into contact with an antigen. Anatomy & Physiology/SBCCOE, CC BY-NC-SA

Importantly, this process of proliferation gives rise to both short-lived effector T cells that shut down the immediate pathogen attack and long-lived memory T cells that provide protection against future attacks. But how do T cells decide whether to form cells that kill pathogens now or protect against future infections?

We are a team of bioengineers studying how immune cells mature. In our recently published research, we found that having multiple pathways to decide whether to kill pathogens now or prepare for future invaders boosts the immune system’s ability to effectively respond to different types of challenges.

Fight or remember?

To understand when and how T cells decide to become effector cells that kill pathogens or memory cells that prepare for future infections, we took movies of T cells dividing in response to a stimulus mimicking an encounter with a pathogen.

Specifically, we tracked the activity of a gene called T cell factor 1, or TCF1. This gene is essential for the longevity of memory cells. We found that stochastic, or probabilistic, silencing of the TCF1 gene when cells confront invading pathogens and inflammation drives an early decision between whether T cells become effector or memory cells. Exposure to higher levels of pathogens or inflammation increases the probability of forming effector cells.

Surprisingly, though, we found that some effector cells that had turned off TCF1 early on were able to turn it back on after clearing the pathogen, later becoming memory cells.

Through mathematical modeling, we determined that this flexibility in decision making among memory T cells is critical to generating the right number of cells that respond immediately and cells that prepare for the future, appropriate to the severity of the infection.

Understanding immune memory

The proper formation of persistent, long-lived T cell memory is critical to a person’s ability to fend off diseases ranging from the common cold to COVID-19 to cancer.

From a social and cognitive science perspective, flexibility allows people to adapt and respond optimally to uncertain and dynamic environments. Similarly, for immune cells responding to a pathogen, flexibility in decision making around whether to become memory cells may enable greater responsiveness to an evolving immune challenge.

Memory cells can be subclassified into different types with distinct features and roles in protective immunity. It’s possible that the pathway where memory cells diverge from effector cells early on and the pathway where memory cells form from effector cells later on give rise to particular subtypes of memory cells.

Our study focuses on T cell memory in the context of acute infections the immune system can successfully clear in days, such as cold, the flu or food poisoning. In contrast, chronic conditions such as HIV and cancer require persistent immune responses; long-lived, memory-like cells are critical for this persistence. Our team is investigating whether flexible memory decision making also applies to chronic conditions and whether we can leverage that flexibility to improve cancer immunotherapy.

Resolving uncertainty surrounding how and when memory cells form could help improve vaccine design and therapies that boost the immune system’s ability to provide long-term protection against diverse infectious diseases.

Kathleen Abadie was funded by a NSF (National Science Foundation) Graduate Research Fellowships. She performed this research in affiliation with the University of Washington Department of Bioengineering.

Elisa Clark performed her research in affiliation with the University of Washington (UW) Department of Bioengineering and was funded by a National Science Foundation Graduate Research Fellowship (NSF-GRFP) and by a predoctoral fellowship through the UW Institute for Stem Cell and Regenerative Medicine (ISCRM).

Hao Yuan Kueh receives funding from the National Institutes of Health.

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President Biden Delivers The “Darkest, Most Un-American Speech Given By A President”

President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through…

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1 hour ago

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March 8, 2024

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President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through the State of The Union, President Biden can go back to his crypt now.

Whatever 'they' gave Biden, every American man, woman, and the other should be allowed to take it - though it seems the cocktail brings out 'dark Brandon'?

Tl;dw: Biden's Speech tonight ...

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

"that was possibly the darkest, most un-American speech given by an American president. It wasn't a speech, it was a rant..."

Carlson continued: "The true measure of a nation's greatness lies within its capacity to control borders, yet Bid refuses to do it."

"In a fair election, Joe Biden cannot win"

And concluded:

“There was not a meaningful word for the entire duration about the things that actually matter to people who live here.”

Victor Davis Hanson added some excellent color, but this was probably the best line on Biden:

"he doesn't care... he lives in an alternative reality."

*  *  *

Watch SOTU Live here...

*   *   *

Mises' Connor O'Keeffe, warns: "Be on the Lookout for These Lies in Biden's State of the Union Address." 

On Thursday evening, President Joe Biden is set to give his third State of the Union address. The political press has been buzzing with speculation over what the president will say. That speculation, however, is focused more on how Biden will perform, and which issues he will prioritize. Much of the speech is expected to be familiar.

The story Biden will tell about what he has done as president and where the country finds itself as a result will be the same dishonest story he's been telling since at least the summer.

He'll cite government statistics to say the economy is growing, unemployment is low, and inflation is down.

Something that has been frustrating Biden, his team, and his allies in the media is that the American people do not feel as economically well off as the official data says they are. Despite what the White House and establishment-friendly journalists say, the problem lies with the data, not the American people's ability to perceive their own well-being.

As I wrote back in January, the reason for the discrepancy is the lack of distinction made between private economic activity and government spending in the most frequently cited economic indicators. There is an important difference between the two:

  • Government, unlike any other entity in the economy, can simply take money and resources from others to spend on things and hire people. Whether or not the spending brings people value is irrelevant

  • It's the private sector that's responsible for producing goods and services that actually meet people's needs and wants. So, the private components of the economy have the most significant effect on people's economic well-being.

Recently, government spending and hiring has accounted for a larger than normal share of both economic activity and employment. This means the government is propping up these traditional measures, making the economy appear better than it actually is. Also, many of the jobs Biden and his allies take credit for creating will quickly go away once it becomes clear that consumers don't actually want whatever the government encouraged these companies to produce.

On top of all that, the administration is dealing with the consequences of their chosen inflation rhetoric.

Since its peak in the summer of 2022, the president's team has talked about inflation "coming back down," which can easily give the impression that it's prices that will eventually come back down.

But that's not what that phrase means. It would be more honest to say that price increases are slowing down.

Americans are finally waking up to the fact that the cost of living will not return to prepandemic levels, and they're not happy about it.

The president has made some clumsy attempts at damage control, such as a Super Bowl Sunday video attacking food companies for "shrinkflation"—selling smaller portions at the same price instead of simply raising prices.

In his speech Thursday, Biden is expected to play up his desire to crack down on the "corporate greed" he's blaming for high prices.

In the name of "bringing down costs for Americans," the administration wants to implement targeted price ceilings - something anyone who has taken even a single economics class could tell you does more harm than good. Biden would never place the blame for the dramatic price increases we've experienced during his term where it actually belongs—on all the government spending that he and President Donald Trump oversaw during the pandemic, funded by the creation of $6 trillion out of thin air - because that kind of spending is precisely what he hopes to kick back up in a second term.

If reelected, the president wants to "revive" parts of his so-called Build Back Better agenda, which he tried and failed to pass in his first year. That would bring a significant expansion of domestic spending. And Biden remains committed to the idea that Americans must be forced to continue funding the war in Ukraine. That's another topic Biden is expected to highlight in the State of the Union, likely accompanied by the lie that Ukraine spending is good for the American economy. It isn't.

It's not possible to predict all the ways President Biden will exaggerate, mislead, and outright lie in his speech on Thursday. But we can be sure of two things. The "state of the Union" is not as strong as Biden will say it is. And his policy ambitions risk making it much worse.

*  *  *

The American people will be tuning in on their smartphones, laptops, and televisions on Thursday evening to see if 'sloppy joe' 81-year-old President Joe Biden can coherently put together more than two sentences (even with a teleprompter) as he gives his third State of the Union in front of a divided Congress. 

President Biden will speak on various topics to convince voters why he shouldn't be sent to a retirement home.

According to CNN sources, here are some of the topics Biden will discuss tonight:

  • Economic issues: Biden and his team have been drafting a speech heavy on economic populism, aides said, with calls for higher taxes on corporations and the wealthy – an attempt to draw a sharp contrast with Republicans and their likely presidential nominee, Donald Trump.

  • Health care expenses: Biden will also push for lowering health care costs and discuss his efforts to go after drug manufacturers to lower the cost of prescription medications — all issues his advisers believe can help buoy what have been sagging economic approval ratings.

  • Israel's war with Hamas: Also looming large over Biden's primetime address is the ongoing Israel-Hamas war, which has consumed much of the president's time and attention over the past few months. The president's top national security advisers have been working around the clock to try to finalize a ceasefire-hostages release deal by Ramadan, the Muslim holy month that begins next week.

  • An argument for reelection: Aides view Thursday's speech as a critical opportunity for the president to tout his accomplishments in office and lay out his plans for another four years in the nation's top job. Even though viewership has declined over the years, the yearly speech reliably draws tens of millions of households.

Sources provided more color on Biden's SOTU address: 

The speech is expected to be heavy on economic populism. The president will talk about raising taxes on corporations and the wealthy. He'll highlight efforts to cut costs for the American people, including pushing Congress to help make prescription drugs more affordable.

Biden will talk about the need to preserve democracy and freedom, a cornerstone of his re-election bid. That includes protecting and bolstering reproductive rights, an issue Democrats believe will energize voters in November. Biden is also expected to promote his unity agenda, a key feature of each of his addresses to Congress while in office.

Biden is also expected to give remarks on border security while the invasion of illegals has become one of the most heated topics among American voters. A majority of voters are frustrated with radical progressives in the White House facilitating the illegal migrant invasion. 

It is probable that the president will attribute the failure of the Senate border bill to the Republicans, a claim many voters view as unfounded. This is because the White House has the option to issue an executive order to restore border security, yet opts not to do so

Maybe this is why? 

While Biden addresses the nation, the Biden administration will be armed with a social media team to pump propaganda to at least 100 million Americans. 

"The White House hosted about 70 creators, digital publishers, and influencers across three separate events" on Wednesday and Thursday, a White House official told CNN. 

Not a very capable social media team... 

The administration's move to ramp up social media operations comes as users on X are mostly free from government censorship with Elon Musk at the helm. This infuriates Democrats, who can no longer censor their political enemies on X. 

Meanwhile, Democratic lawmakers tell Axios that the president's SOTU performance will be critical as he tries to dispel voter concerns about his elderly age. The address reached as many as 27 million people in 2023. 

"We are all nervous," said one House Democrat, citing concerns about the president's "ability to speak without blowing things."

The SOTU address comes as Biden's polling data is in the dumps. 

BetOnline has created several money-making opportunities for gamblers tonight, such as betting on what word Biden mentions the most. 

As well as...

We will update you when Tucker Carlson's live feed of SOTU is published. 

Tyler Durden Fri, 03/08/2024 - 07:44

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