On the Role of Stablecoins in Cryptoasset Pricing Dynamics

30 Pages Posted: 27 Sep 2020 Last revised: 5 Jan 2021

See all articles by Ladislav Kristoufek

Ladislav Kristoufek

Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies; Institute of Information Theory and Automation, Prague

Date Written: December 4, 2020

Abstract

We examine the interactions between stablecoins, Bitcoin, and a basket of altcoins to uncover whether stablecoins represent the investors' demand for trading and investing into cryptoassets or rather play a role as boosting mechanisms during cryptomarkets price rallies. Using a set of instruments covering the standard cointegration framework as well as quantile-specific and non-linear causality tests, we argue that stablecoins mostly reflect an increasing demand for investing in cryptoassets rather than serve as a boosting mechanism for periods of extreme appreciation. We further discuss some specificities of 2017, even though the dynamic patterns remain very similar to the general behavior. Overall, we do not find support for various scandalous claims about stablecoins.

Keywords: cryptocurrencies, cryptoassets, Bitcoin, stablecoins, Tether

JEL Classification: C58, G14, G15

Suggested Citation

Kristoufek, Ladislav, On the Role of Stablecoins in Cryptoasset Pricing Dynamics (December 4, 2020). Available at SSRN: https://ssrn.com/abstract=3672909 or http://dx.doi.org/10.2139/ssrn.3672909

Ladislav Kristoufek (Contact Author)

Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies ( email )

Opletalova 26
Praha 1, 11000
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/en/staff/kristoufek

Institute of Information Theory and Automation, Prague ( email )

Pod vodarenskou vezi 4
Praha, CZ-18208
Czech Republic

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