Let me prophesy, stablecoins won't save US Treasuries

1. Stablecoins are pegged to the US dollar, which is essentially a different form of exchanging for US Treasuries. Although these tokens can only be used in virtual markets and black markets, you can understand it as converting dollars from the virtual market into your own market. The virtual currency market is essentially a circulation of these hypothetical tokens, generating virtual wealth.

2. If the goal of stablecoins also includes international trade, then this issue carries the nature of currency issuance. If it is a 1:1 exchange, what difference does it make to use stablecoins versus directly using US dollars? This is clearly an increase in the issuance of US dollars. The basis for this increase in US dollars is still the growth of US Treasuries, which accumulates the risk of high US debt. Compared to the present, it is just that more US dollars have been found to pay for the purchase of US Treasuries and the interest on expenditures, without solving the US debt crisis. The US debt crisis remains unresolved. After all, the money of other countries is limited and will not be printed indiscriminately; only a small portion may buy US Treasuries through stablecoins, but it cannot withstand the greed of US debt.

3. A 1:1 exchange between stablecoins and US Treasuries has no appreciation space. Generally speaking, the appreciation space lies in the virtual currency market. Therefore, the US will deliberately maintain the prosperity of the virtual currency market to ensure that stablecoins have enough appeal. However, the virtual currency market has a huge bubble. USDT and USDC have absorbed about 200 billion dollars in the market, but the entire virtual currency market has a market value of 3.5 to 4 trillion dollars. In other words, the entire market that relies on 200 billion in stablecoins as a foundation has a value of 3.5 trillion. Such a market cannot withstand a run on it, so it must ensure that the market value of Bitcoin and other virtual currencies continues to grow to avoid a bubble burst. But can it really keep growing?

Therefore, stablecoins essentially utilize the characteristics of virtual currency and virtual wealth to attract real US dollars to purchase Treasuries. By creating a false digital virtual currency boom, this game is dragged out as much as possible. #GENIUS稳定币法案