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Euro-Backed Stablecoins Rise by 1,683% since 2020

The stablecoin economy is worth approximately $153 billion today but most of this value has been attributed to stablecoins that were pegged to the US Dollar. That is, until now. Since January 2020, the number of euro-based stablecoins has risen from $31.9 million to $569 million in July 2022.

Stablecoins are cryptocurrencies that are pegged to the value of a fiat currency such as the Euro or the USD. Although it doesn’t sound like it fits the DeFi bill, the purpose behind such tokens is to reduce volatility so that they can be utilised. Now, there have always been a few crypto assets pegged to the Euro, the Pound, the Yen, and even the Peso, but none compared to the USD pegged cryptos.

One of the most popular USD-pegged stablecoins, Tether, also has a EUR-pegged stablecoin with $400 million worth of EURT in circulation. It's been the biggest stablecoin pegged to the value of the Euro so far. But Circle just released their second major stablecoin backed to the Euro as well, called the eurocoin (EUROC). However, will Circle's euro stablecoin be able to contend with the existing players? EUROC market capitalization is naturally much lower than its contenders, but EUROC’s valuation still grew by 43,685% since June 30.

Stasis euro (EURS) has seen the most trade volume on August 1, 2022, with $13,273,109 in global trades, while EUROC has recorded just over $127,000 in 24-hour trade volume.

Rate hikes

The Australian Central Bank’s rate hike announcement was amongst the most important economic developments this week. The official decision came in on Tuesday, with the Reserve Bank of Australia raising the interest rates by 50 basis, or 0.50%. This decision comes against the backdrop of rising inflation rates which came in at 6.1% last week. The rate hike doesn't echo the aggressive approaches of other major banks, but that's probably because Australian economic figures came in a little better than others. The US raised the interest rate by 75 basis points against a 9.1% CPI, while Canada went ahead with a 100 basis-point hike when their CPI came in at 8.1%. Australia’s economic data has appeared more resilient with a 6.1% CPI, decent building approval figures, and unemployment rates coming in at multi-generational low of 3.5%.

Forex - AUD/USD

The AUD/USD pair edged higher ahead of the decision announcement, though its success could also be attributed to the general weakening of the USD. However, in the monetary policy decision, bank governor Philip Lowe has reiterated that the Australian economy would grow slower in the upcoming years. The forecasted GDP for the next two years now stands at 1.75% compared to the previously forecasted 2%. This tipped the scales in favour of the USD, but not by much.

Traders will closely monitor the reminder of the economic developments this week, especially because the NFP report, which is usually released on the first Friday of the new month, is known to create some volatility for the US Dollar. Sino-American tensions could also create some pressure for the currency pair.

AUSUSD - 02.08.2022.jpg

Asian Stocks

Stock Markets in China took some losses yesterday, as geopolitical tensions between China and the US heightened. The Shanghai Composite Index shed 2.22%, the Shenzhen Component dropped 2.19%, and the Hang Seng index lost 2.25%. The US-China tensions have been building for years now, but it's hard to say what would cause a boilover. The most recent round of turbulence is related to Taiwan. A breakaway democratic island which China refuses to let go off.

There are rumours that US House Speaker, Nancy Pelosi, plans to visit Taiwan during her Asian visit, to which China has responded by saying that their army would do everything in their power to uphold China’s “sovereignty and territorial integrity.” China is concerned that visits from US officials encourage the pro-independence movement on the island.

But geopolitical escalations tend to affect all Asian markets, not just China. Nikkei 225 slipped 1.47% and Topix fell 1.7%. Similarly, indices in Korea and Taiwan also saw losses yesterday. However, it's not all doom and gloom. Chinese electric vehicle makers, Nio, Xpeng, and Li Auto, reported a jump in car deliveries for July, pushing shares upstream.Their stocks rose by 2.3%, 0.2% and 3.8%. Xpeng respectively.

Key Takeaways

  • The number of euro-based stablecoins has risen from $31.9 to $569 million since 2020.
  • Circle released EUROC, creating new competition for Tether’s euro stablecoin.
  • The Reserve Bank of Australia raised the interest rates by 50 basis, or 0.50%.
  • Australia’s economic figures include a 6.1% CPI, decent building approval figures, and unemployment rates at multi-generational low of 3.5%.
  • Australia lowered its forecasted GDP for 2023-24, tipping the scales in favour of USD.
  • Asian Stocks on shaky ground as geopolitical China-US tensions heighten.
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