Browsing by Author "Alshammari, Naif"

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Comparative Analysis of Stablecoin Market Capitalization
(University of Sussex, 2024) Alshammari, Naif; Alexander, Carol
This paper takes a closer look at the market capitalization trends for the five most popular stablecoins: Tether, USD Coin, Dai, TrueUSD, and PAX Gold. Stablecoins are digital currencies whose price volatility is minimized since their value is pegged to an underlying asset, such as a fiat currency or commodity. Despite the ever-growing importance, very little research has been done to explain the factors affecting their market capitalization and what this means for the general financial market. The design of the research applies an empirical study with a quantitative approach in analyzing historical data of the market capitalization for these stablecoins over a defined period. In the analysis, it identifies major determinants of the market capitalization: regulatory developments, rates of adoption, technological advancements, and macroeconomic conditions. The study further shows comparative stability and growth patterns among the chosen stablecoins and gives insight into which performs better relatively in the cryptocurrency marketplace. The results indicate there were major differences in the trends of market capitalization for studied stablecoins, thus evidence of the impact from exogenous variables such as regulatory change and changes in market demand. In the light of this, the study finds that it is very important to stakeholders, including investors, policy makers, and financial analysts, that these factors are understood well to make informed decisions within the fast-changing landscape of digital currencies. This work thus adds value to the literature base with meaningful insights into the dynamics of stablecoin market capitalization, with implications for the future of digital financial assets.
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