How they achieve that varies: the largest, such as tether and USD Coin, are effectively banks.
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They hold large reserves in cash, liquid assets, and other investments, and simply use those reserves to maintain a stable price. Others, known as "algorithmic stablecoins", attempt to do the same thing but without any reserves. They have been criticised as effectively being backed by Ponzi schemes, since they require continuous inflows of cash to ensure they don't collapse.
Stablecoins are an important part of the cryptocurrency ecosystem. These large holders - referred to as 'whales' - are said to make up of two percent of anonymous ownership accounts, whilst owning roughly 92 percent of BTC. On top of this, most people who use cryptocurrency-related services worldwide are retail clients rather than institutional investors.
Highest projection Some of our panelists feel that Bitcoin's price will remain suppressed and stay in a range well below its all-time high. As world economies are languishing and lack of safeguards to consumers FTX scandalsmost crypto prices will not improve drastically.
I believe that the current price of Bitcoin is a good entry point for investors, and I anticipate it will continue to rise in the long term.
Do you think Bitcoin is currently overpriced, underpriced or fairly priced?
Most of our panelists feel that Bitcoin is currently selling at a discount. We are already in the miner capitulation phase of this bear market, which typically concludes the downturn.
Bitcoin rally leads to new BTC millionaires
However, some of our panelists believe that, over time, Bitcoin will be seen more as a store of value. Do you think Bitcoin will eventually be overthrown as the number 1 cryptocurrency?
Only one of our panelists was specific about which cryptocurrency — aside from Ether ETH or a CBDC — had the potential to overthrow Bitcoin. Last week, at a crypto conference in St. Moritz, Switzerland, CNBC spoke to industry insiders who painted a picture of as year of caution. Bitcoin short sellers have been squeezed by sudden upward moves in prices, according to Ayyar.
Short selling is an investment strategy whereby traders borrow an asset and then sell it in the hope that it will depreciate in value. A wipe-out of those short positions sparked by the rising price of bitcoin has added "fuel to the fire," Ayyar said, as short sellers are forced to cover their bets by buying back the borrowed bitcoin to close them out.