There’s no doubt that 2021 has been full of bullish crypto activity.
Bitcoin crossed $1 trillion in value, Ethereum has rallied nearly 400% already, and we’re watching a decentralized economy develop at lightning speed.
However, one of the most bullish developments in crypto has gone largely unnoticed: stablecoins.
Stablecoins are a special type of cryptocurrency that’s pegged to a fiat currency. So far, most of them are pegged to the dollar.
For example, USD Coin (USDC) is a stablecoin listed on Coinbase, and its value is always $1.
And while they may be “boring” compared to most other things in crypto, I believe that these coins have had a tremendously positive impact on the usefulness of decentralized finance, or “DeFi.”
Essentially, stablecoins serve as a bridge between traditional finance and the entirely separate world of crypto.
When you use decentralized blockchains such as Ethereum, you can’t send actual dollars or any other type of fiat currency. You can only send tokens that are programmed to be used on the blockchain.
This means you’d have no way to “cash out” into a fiat currency if stablecoins didn’t exist. And because there are no borders or hurdles in sending crypto, it makes fiat much easier to send to anywhere in the world.
I’m going to tell you my stablecoin prediction for 2021. And the best way you can enter the cryptoverse for amazing gains.
Invest in Seriously High Demand
When centralized exchanges such as Binance and Coinbase became popular in 2017, it sparked a sudden flood of demand for stablecoins.
This caused the amount in circulation to explode from $9 million to $1.4 billion in 2017 alone.
By the end of January 2018, the supply had nearly doubled again to $2.3 billion.
Then came the bear market, and along with crypto hype, the demand for stablecoins plummeted. Over the following two years, the supply only grew by about 150%.
However — as you can see in the chart below — it’s come back in a massive way over the past year. Now there is worth over $87 billion in circulation:
This time around, the main driver of demand is not centralized exchanges … it’s DeFi.
Most of the DeFi world runs on the Ethereum blockchain. And while there are other blockchains, the key part of decentralized finance is that there’s no way to directly use fiat currency.
Instead, you can lend your stablecoins on apps such as Aave or Compound and earn much higher interest rates than you would at banks.
See, in a traditional savings account, you’d earn maybe 0.1% per year. In DeFi, you can earn 5% to 10% or even more.
You can also use these apps to deposit other cryptocurrencies like Ethereum or bitcoin and take out stablecoin loans using that crypto as collateral.
Another critical part of the stablecoin demand has come from decentralized exchanges (DEXs) such as Uniswap.
Lots of people use stablecoins in DEX’s to trade in and out of all kinds of cryptocurrencies, but there’s another use for them…
Unlike traditional exchanges, DEX’s give users the opportunity to supply their coins to the overall trading pool, which means other people will be able to trade them.
In return for supplying your coins, you earn trading fees whenever someone makes a trade with the type of coins that you supply.
So, if you supply USDC to Uniswap, you make money whenever someone uses USDC for a trade.
This has become an extremely popular feature of DeFi, as you can see by the surge in trading volume:
Through April, there’s been an average of $3.37 billion in DEX trading volume per day.
To put this in perspective, the total amount traded in the first four months of 2020 was $4.85 billion.
This demand is undoubtedly helped by the rise of stablecoins.
Bottom Line: You Can Make Money in Crypto
There’s so much upside in the cryptoverse.
I believe that as more people realize the benefits of DeFi — especially during this bull market — the amount of stablecoins in circulation is going to explode.
So, my prediction is that there will be $1 trillion in stablecoins by the end of 2021.
Now. How can you play this rise?
The first thing you can do is get your crypto prep kit. Paul and I filmed three videos to get you ready to start trading.
We’re about to launch a new research trading service called Crypto Flash Trader. And we’re giving away free content to anyone that signs up for it here.
You’re not signing up for the new service, but you will be the first to hear about it when it goes live. And you still get to keep all the free information we send out.
Which is good because we’re starting to add crypto recommendations in almost all of our services — even in your Bold Profits Daily.
Editor, Rapid Profit Trader
P.S. I told you today about how blockchains are heavy hitters in the DeFi crypto revolution. What I didn’t get to was that there’s a window of opportunity right now to invest in blockchain technology itself. This is disruptification at its very core. And it’s happening now. Click here to see the full story.