This is a collaborative post: It’s difficult to find a stable crypto investment in 2022. The popular currencies have plunged in value and continue to swing up and down unpredictably. Fortunately, there are some cryptocurrencies that have had a remarkably stable price in 2022, called stablecoins. For example, USDT has varied in price by no more than 0.5% in the past year and has never dropped below $0.91, even during the market panic of 2017.
There are various kinds of stablecoins, from fiat currency to oil-backed stablecoins. Here, we’ll discuss whether it’s reasonable to invest in them and whether you should swap your ETH to USDT.
Stablecoins vs Other Cryptocurrencies
The goal of a stablecoin is to maintain its value in relation to something else. This can be:
- Fiat currencies such as the US Dollar, Euro, or Pound
- Commodities, such as gold, silver, or oil
- Indexes of other cryptocurrencies
They achieve this by allowing the cryptocurrency to be convertible for a specific amount of what they are backed by. So, at any time you can theoretically trade in your USDT for 1 real US Dollar. Or, you can trade 1000 Gold Coin (GLC) for one ounce of gold. Here’s a list of various stablecoins available and what they are redeemable for:
| Stablecoin | Pegged to |
| Tether (USDT) | 1 US Dollar |
| USD Coin (USDC) | 1 US Dollar |
| Gold Coin (GLC) | 0.001 ounces of gold |
| Silver Coin (LKNS) | 1 gram of 99.9% silver bullion |
| Rupiah Token (IDRT) | 1 Indonesian Rupiah |
| STASIS EURO | 1 Euro |
Do Stablecoins Live up to Their Promises?
The above stablecoins can theoretically be traded at any time; however, the word “theoretically” is critical. A stablecoin will only hold its value if the organization backing it lives up to this promise. If they stop making the currency redeemable, the stablecoin can very quickly lose its value. So far, there have been a few stablecoins that have lost their value due to mismanagement. The list includes flexUSD, Dues Finance, Terra/Luna, DefiDollar, and BeanStalk.
The main reason this happens is if the organization does not hold full reserves of the currency. For example, Tether has a market cap of $65 billion, so they theoretically should be able to redeem 65 billion tokens for US Dollars at any time. However, they often instead invest the funds in risky investments. If those investments go bad, it can cause a bank run on the token. This is what some people are worried about with Tether, as the company is very secretive about its financial holdings.
Is It Safe to Buy Stablecoins in 2022?
So far, many of the most popular stablecoins have remained remarkably stable, even through market downturns. So, they still hold a lot of trust in the crypto market. There are now stablecoins emerging that focus more on transparency and accountability, such as USD Coin.
Converting ETH to USDT: Pros and Cons
The pros of converting ETH to USDT are:
- Your ETH investment will stop losing value in dollar terms if the crypto prices drop.
- You’ll have certainty over the dollar value of your investment.
The cons are:
- If the price of ETH and other crypto goes up, your USDT will not raise in value, and you won’t profit.
- You could lose part of all of your USDT investment if Tether loses its peg due to mismanagement.
ETH Price Prediction: Maybe We Should Give ETH Some Time to Recover?
The ETH price has dropped significantly in 2022 to around $1,000-$1,500. But, it may recover much of its lost value. Here are some expert price predictions for 2023:
- PricePrediction.net: $3,745.67
- DigitalCoinPrice.net: $2,147.06
- Gov Capital: $4917.414
If these predictions come true, then ETH will certainly outcompete USDT as an investment.
Final Thoughts
Stablecoins are a fantastic way to diversify your crypto holdings and reduce your investment risk. Although, remember that any stablecoin project is only as stable as the organization that runs it, so make sure it’s reputable. To exchange ETH/USDT, TRX to ETH, or any other crypto pair, Godex is a great service. It has over 300 cryptocurrencies available and allows for fast, safe, and anonymous exchange.