Tethered, or Untethered? On the interplay between stablecoins and major cryptoassets

Ladislav Krištoufek ()

Finance Research Letters, 2021, vol. 43, issue C

Abstract: Stablecoins and their leader Tether have been one of the controversial topics of cryptomarkets and their role in price rallies of the past few years has been questioned repeatedly. Using the generalized vector autoregressive framework and directed spillovers based on the forecast error variance decompositions, we find no evidence of stablecoins boosting the prices of other cryptoassets. On the contrary, the increased stablecoins issuances come in reaction to the other cryptoassets price changes, which suggests they rather reflect increasing demand in investing into the cryptomarkets that gets materialized in demand for the “digital fiat”.

Keywords: Cryptocurrencies; Cryptoassets; Bitcoin; Stablecoins; Tether; Spillovers (search for similar items in EconPapers)
JEL-codes: E51 F30 G15 G23 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000726

DOI: 10.1016/j.frl.2021.101991

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