The Dynamics of the Cryptocurrency Market: A Comparative Analysis of Stablecoins and Non-Stable Currencies

Résumé

The primary purpose of the current article is to fill the existing research gap on the role of stablecoins in the global financial system and how the backed cryptocurrencies have been and can integrated with traditional foreign exchange markets. The study adopted a mixed research methodology that involves both qualitative and quantitative techniques of data collection and analysis. The qualitative methodological framework was based on the Joanna Briggs Institute (2015) and was informed by Arksey and O’Malley’s (2005) approach of summary and dissemination of research findings and, in accordance with PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) guidelines. Graphical visualizations were used to present the quantitative results. According to the research findings, stablecoins combine a digital environment and a payment instrument based on a smart contract built on dedicated digital token and are considered as digital solutions for creating financial inclusion and addressing cross-border payment issues. Stablecoins can be used in digital markets, payments, internal transfers and liquidity management, and in decentralized finance (DeFi). Quantitatively, the results show that Tether is the largest stablecoin with a total market capitalization of $102.016 billion, followed by USD Coin (USDC) with a market capitalization of $32.62 billion, and Binance USD with a market capitalization of $70.54 million. A comparative analysis of the four cryptocurrencies indicates the significant differences between stablecoins and the non-stable currencies. The rapid adoption of cryptocurrencies, especially stablecoins, highlights the significance of digital tokens in the global financial system, and the urgent need for integration with the traditional foreign exchange markets.