Stablecoin Risks

Chart of the Day

Seasonality has a considerable impact on investors' psychology, and often pans itself out as a self-fulfilling prophecy. If you're not convinced, just take a look at the sell-off in May and the extreme volatility in September. If you were to superimpose these seismic events onto the historical monthly returns, you will be able to see a strong correlation. Historically, Bitcoin has a tendency to gain 11%-18% in the fourth quarter, which is one of the key reasons why many market participants are now maintaining a bullish outlook on it. Of course, this sentiment is not without logic. Certain on-chain metrics also support this prevailing bullish stance, as BTC's latest rally has not been met with extreme fluctuations in the implied volatility chart. Rather, both short and long-term implied volatility levels have remained relatively flat, suggesting that the market is healthy, with sentiments in check. 

Talk of the Town

The much-anticipated U.S. Treasury report on stablecoin risks, formulated by the President's working group, was released on Monday. In the report, the panel headed by Treasury Secretary Janet Yellen urged Congress to pass legislation to regulate stablecoin issuers in the same way that they do insured depository institutions. The panel also recommended a more stringent oversight of the stablecoin industry in order to guard against stablecoin runs, payment system risks, and an economic concentration of power. "The rapid growth of stablecoins increases the urgency of this work," the report stated.