USDT and other Stablecoins Borrowing Rates Flat Line
In the past few weeks, the borrowing rate of stablecoins, including USDT, has been flat-lining.
Analysts associate this with a possible reduction in Ethereum on-chain activity due to steady ETH prices, directly impacting DeFi.
Usually, the fluctuation of borrowing rates can be used to track activity in Ethereum and other smart contracting networks. In the lead-up to ETH, EOS, and TRX's rapid expansion in Q1 2021, for example, there was a marked spike in the borrowing rate of USDT and the rest. Meanwhile, DeFi--and every other sub-sector in most smart contracting platforms--registered high trading volumes. This vibrancy, in turn, helped sustain prices at a record high.
Therefore, the contraction in borrowing rates could be extended to mean general apprehension among traders—more so in DeFi—who aren't sure of where token prices could be headed up in the medium term. However, if borrowing rates begin to rise in the days ahead, it would be highly likely that ETH—EOS/TRX—prices would increase in sync, a net positive.
USDT and stablecoins are central to cryptocurrencies. Ethereum is the most active medium, facilitating the transfer of trillions of stablecoins in the past few months. USDT plays various critical roles, including acting as a value refuge for traders and investors during periods of high volatility.
USDT is one of the tokens supported by CryptoAltum.
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