Volatility is a statistical measure that shows how much a price of an asset can change over a period of time. The higher the price the riskier the asset. For cryptocurrencies, volatility has been a characteristic quality since their inception. Compared to other asset classes, volatility in cryptocurrencies is a regular phenomenon, with prices moving by several percent per day.
Brian Armstrong, CEO of cryptocurrency exchange Coinbase and Bitcoin advocate, has argued that volatility is one of the problems that cryptocurrencies face and which needs to be overcome to reach mass adoption.
In a 45-minute Ask Me Anything (AMA) session published on YouTube on April 2nd, Armstrong said that volatility, scalability and usability, were significant issues that have to be dealt with in order to achieve widespread cryptocurrency adoption. Particularly, Bitcoin’s volatility has been a major concern in the crypto community with Bitcoin prices rising steeply to $20,000 and dropping to $3000.
The creation of stablecoins, cryptocurrencies pegged to fiat, usually the US dollar, such a Tether, have given an alternative solution to the issue of volatility, but have raised various questions regarding the veracity of statements behind their performance and promises. Tether (USDT), which is one of the most popular stablecoins in the crypto industry, is pegged to the US Dollar. However, people have questioned whether there is exactly the same amount of dollars held in a designated bank account to support the supply of USDT.