What Are Stablecoins and Why Do They Rank So High?

Scroll down the price table and you will find coins whose price barely moves from $1.00, yet whose market caps and trading volumes rival the largest cryptocurrencies. These are stablecoins: tokens designed to hold a steady value, usually pegged to the US dollar.

Why stablecoins exist

Most cryptocurrencies are volatile, which makes them awkward as a unit of account or a place to hold money between trades. Stablecoins give traders a dollar-like asset that lives on a blockchain: it can be moved between exchanges and wallets at any hour, settled within minutes and used in decentralized applications.

That is also why stablecoins often post some of the highest 24-hour volumes on the site. Much of that volume is money moving in and out of other coins, not demand for the stablecoin as an investment. Our volume guide covers this in more detail.

How the peg is maintained

Stablecoins use three broad designs:

• Fiat-backed. An issuing company holds reserves — cash, short-term government debt and similar assets — and redeems tokens for dollars. Tether’s USDT and Circle’s USDC are the largest examples. Their stability depends on the reserves actually existing, being high quality and being available when holders want to redeem.
• Crypto-backed. Tokens are issued against other cryptocurrencies locked in smart contracts, with more collateral posted than the value of the stablecoins issued, so the system can absorb price swings. If the collateral falls too far, it is sold automatically. DAI, created by the MakerDAO protocol (since rebranded as Sky), is the best-known example.
• Algorithmic. These try to hold the peg through automated incentives with little or no independent collateral. The approach has a poor track record: TerraUSD (UST), once one of the largest stablecoins, collapsed in May 2022 when confidence broke and its stabilizing mechanism amplified the selling.

What a depeg looks like

A depeg is when a stablecoin trades meaningfully away from its target, usually below it. Even fiat-backed coins can wobble: in March 2023, USDC briefly fell well below $1 after Circle disclosed that part of its reserves was held at Silicon Valley Bank, which had just failed. It recovered once it became clear that the deposits would be accessible.

On Leveraged Weekly, a depeg shows up as a stablecoin price clearly away from $1.00, often accompanied by a sharp jump in 24-hour volume. A move of a fraction of a cent is normal market noise; a sustained move of several cents is not.

Stablecoins and the bigger picture

Because stablecoins make up a large share of total crypto market cap, their growth affects headline statistics. When investors sell volatile coins into stablecoins, the money stays inside the crypto market, which can make Bitcoin dominance look lower than it otherwise would. Some analysts strip stablecoins out of market-wide figures for that reason.

Stablecoins are also increasingly regulated, with rules in a growing number of jurisdictions covering how reserves must be held and reported. Those rules differ from country to country and continue to change.

Reading stablecoins on the site

On a stablecoin’s coin page, focus on how closely the price stays to $1.00 and on the market cap, which roughly tracks the number of tokens in circulation. The percentage-change columns will usually be tiny. If they are not, that is the story.