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Zero Interest Rates Not The Only Driver For Stablecoin Demand

The coronavirus has brought zero USD interest rates. And with zero or potentially even negative interest rates, it might also bring greater demand for stablecoins and for cryptocurrencies more generally.

Why? Because now there’s no opportunity cost when it comes to holding USD-backed stablecoins, as opposed to holding USD in a bank, something which will no longer provide interest.

At the same time, likely volatility in the crypto market will generate additional demand for stablecoins, since they will provide a buffer against fluctuating prices. And as zero or negative interest rates and possible USD inflation create greater demand for non-stablecoin cryptocurrencies, stablecoins may also witness further inflows.