Crypto is down and the stock market is not doing well either. At the same time, Euro and the British Pound are losing value against the US-Dollar. This is a troublesome situation since many retail investors lack access to diversify their portfolios properly.

How can stablecoins contribute to resolving this situation and what do they have to offer?

The Fed will strengthen the Dollar

The UN already warned the Fed that its course could start a worldwide recession. The effect will be fierce for the richest countries, but more devastating to developing countries. They are dependent on a weaker Dollar and without a pivot, some could even face famine or conflicts over available resources with their neighbors.

Of course, those are worst-case scenarios, but even when taking more optimistic projections into account, developing countries will suffer the most.

The problem is that the Fed has no reason to pivot. A strong Dollar as the world’s reserve currency is the Fed’s goal. If we take a close look at the past, we will find that this is the Fed’s mission and it has no other concern than supporting the best interest of the US government.

Stablecoins offer an opportunity

Gaining access to foreign currencies is not easy. Generally speaking, it is easier if you live in Europe and have full access to the financial system. In that case, a customer has to pay fees to his bank which often offers to open up a separate account in USD, CHF, or any other fiat currency.

The fees are not the only entry barrier. Another aspect is the exchange rate that banks offer. If you ever have paid in or received a foreign currency, you might have noticed that the exchange rate differs between banks. If you’re lucky you end up with a bank that offers moderate fees and an exchange rate that reflects the current price of the currency in question.

Stablecoins are a promising alternative. You can buy or sell USDC for a low fee of 0,25 % here on LiteBit and hold the stablecoin in your LiteBit wallet for free. This allows access to a tokenized form of the US-Dollar for retail investors even if they only have small amounts of money at their disposal. Should the trend continue and the Dollar strength will rise to new highs, then fast, reliable, and cost-effective access to stablecoins could become crucial for investors who are looking to diversify their portfolios.