Analyzing the role of stablecoins on Binance and their impact on liquidity and speculation
Introduction: What are stablecoins and why are they considered a cornerstone in the crypto market?
In 2025, stablecoins like Tether (USDT) and USD Coin (USDC) are considered cornerstones in the cryptocurrency market. Thanks to their stability linked to the US dollar, these currencies are used as a bridge between the centralized and decentralized worlds (Web3), supporting liquidity, speculation, and cross-border financial transfers.
Binance, the largest globally, is a vital platform supporting stablecoins, offering advanced trading tools such as futures and staking, making it a key hub for USDT and USDC movement. In this article, we explore the future of stablecoins on Binance, analyzing their role in supporting liquidity, hedging, and speculation.
1. Definition of stablecoins: USDT and USDC in the context of the digital market
What are stablecoins?
Stablecoins are digital tokens backed by financial collateral (Collateral), such as bank deposits, bonds, or even other currencies like ETH or BTC. These currencies maintain their stable value at $1, making them a safe option for investors amidst sharp market fluctuations.
USDT (Tether): The digital gold for liquidity
Description: The largest stablecoin by volume, with a market value exceeding $90 billion in May 2025.
Support: Managed by Tether Limited, and 80% backed by cash deposits and 20% by short-term bonds.
Usage: Used as a tool to escape volatility, supporting trading on DEXs like Raydium (RAY) and Suilend.
USDC (USD Coin): The institutional stablecoin
Description: A stablecoin fully backed by the US dollar, managed by Circle in collaboration with Coinbase.
Support: Monitored by central banks, enhancing trust in institutional circles.
Usage: Used in DeFi, international transfers, and hedging against inflation.
2. The role of stablecoins on the Binance platform
A. Supporting liquidity in the trading market
USDT is the most liquid currency on Binance Spot, used in trading pairs like BTC/USDT and ETH/USDT.
USDC is an ideal choice for institutions, like Metaplanet, which purchased 1,004 Bitcoins worth $104.3 million via USDC.
B. Hedging against volatility
When the market faces sharp corrections, like Bitcoin dropping from $115,000 to $109,579 in May 2025, investors turn to USDT and USDC to protect their profits.
Example: Users who converted SOL to USDT at $177.08 preserved their assets from expected losses after the price dropped to $160.
C. Supporting new projects through Launchpad and Launchpool
USDT and USDC are used in purchasing new tokens (Token Sales) like SOPH and BERA.
Example: The Berachain project (BERA) attracted $2.3 billion in pre-launch phase through Boyco App, with USDT and USDC as payment methods.
D. Funding in the Futures Market
USDT is used to support leverage trading on Binance Futures, with leverage reaching up to 125x.
USDC is used for institutional hedging, such as Metaplanet, which used USDC to finance BTC purchases.
3. The future of USDT and USDC on Binance in 2025
A. USDT: Will it remain the king?
Market share: USDT still dominates 65% of the stablecoin market, thanks to its support on major networks like Ethereum and Solana.
Challenges:
Investigations into Tether regarding collateral, as reports showed that USDT does not have 100% cash backing.
Competition from emerging stablecoins (like sUSD on Stacks).
Forecasts:
USDT may face regulatory pressure in the United States, altering its nature of use.
However, with USDT's dominance in the retail market, it is expected to remain the top stablecoin on Binance Spot and Futures.
B. USDC: Institutional Rise
Market share: USDC rose to $500 billion in May 2025, thanks to institutional support from Visa and PayPal.
Developments:
Regulatory Compliance, making it an ideal choice for companies like Metaplanet.
Integration with DeFi, such as Balancer and Aave on Ethereum.
Forecasts:
USDC might surpass USDT in international transfers, especially in the Middle East and Africa.
With the upgrade to Ethereum Pectra, USDC will become more efficient in fees and processing speed.
4. How do stablecoins impact liquidity and speculation?
A. Supporting liquidity in the DeFi market
USDT and USDC are used to provide liquidity on protocols like Raydium and Stacks.
Example: USDC increased TVL on Balancer to $1.2 billion, supporting liquidity on Solana (SOL).
B. Hedging against inflation and investing in cryptocurrencies
With rising global inflation, USDC is used as a tool to preserve value without exposure to volatility.
USDT is used for fast transfers to and from other cryptocurrencies, such as SUI and HYPE.
C. Using stablecoins for speculation
USDT is used for speculation on small caps like PEPE and SMITHAM.
USDC is used to hedge against risks by converting between currencies like BTC and ETH.
5. Risks associated with stablecoins on Binance
A. Cash collateral loss
If Tether fails to prove that USDT is 100% backed by the US dollar, it may lose market trust.
USDC may face pressure if the value of the treasury bonds backing it decreases.
B. Regulatory risks
SEC vs Tether: Tether may face fines due to investigations into its cash backing.
USDC may face restrictions in Arab countries like Egypt, where regulators are tightening stablecoins' compliance with local laws.
C. Competition from emerging stablecoins
sBTC on Stacks (STX): A strong competitor to USDT and USDC, offering decentralized collateral.
DAI: With updates like DAI v2.0, it rearranges priorities in institutional hedging.
6. Investment strategies: How to benefit from stablecoins on Binance?
Strategy 1: Using USDT to earn interest through Binance Earn
How?
Join Flexible Savings on Binance Earn, where USDT offers an annual return of up to 4.5%.
Use Locked Savings to earn higher interest, such as 6% annually.
Feature: You can withdraw funds at any time without losing liquidity.
Strategy 2: Using USDC to hedge risks in futures
How?
Convert BTC or ETH to USDC at support levels, such as BTC at $105,000.
Use USDC to buy small caps like HYPE or BERA at support levels.
Feature: USDC provides protection from regulatory risks in Arab countries.
Strategy 3: Using stablecoins for institutional hedging
How?
Institutions like Metaplanet use USDC to purchase Bitcoin (BTC) and Ethereum (ETH), reducing traditional cash transfers.
Binance Futures offers tools to determine the Funding Rate, helping institutions manage financial risks.
Feature: Stablecoins are used as collateral in staking and cross-bridge transfers.
7. How do stablecoins get affected by technical and economic updates?
A. Ethereum Pectra upgrade and its impact on USDC
What's new? Improving gas fees and liquidity on DeFi.
Impact: Increasing USDC transfers from $500 billion to $700 billion in Q3 2025.
B. Launching HyperEVM and its impact on USDT
What's new? Supporting decentralized futures contracts on Hyperliquid (HYPE).
Impact: Using USDT for fast transfers on futures, with expectations of increased liquidity on Binance Futures.
C. Integrating stablecoins into environmental projects (Green Crypto)
Cardano (ADA): USDC is used for transfers across environmentally friendly networks.
Algorand (ALGO): USDT is used in carbon-free transfers.
8. Conclusion: The future of stablecoins on Binance
USDT and USDC dominate the crypto market, but they face regulatory and technical challenges in 2025.
Binance offers advanced tools for using stablecoins, such as futures trading and risk management.
Predictions:
USDT may face restrictions in Arab countries due to new financial laws.
USDC may become the dominant stablecoin in international transfers, especially with updates on Ethereum Pectra.
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