Deutsche Bank (ETR:DBKGn) Research analysts looked at 300 fiat-pegged assets that spanned over 200 years, beginning in 1800. They also learned that 49% of those assets were unsuccessful. According to bank experts, stablecoins’ main reasons for failure are management issues and their exposure to macroeconomic volatility.
According to past events, stablecoins might experience volatility. A lack of operational transparency and susceptibility to speculative sentiment almost guarantees the failure of most, though some may manage to stay afloat.
The stablecoin Terra USD (UST) and its related asset LUNA collapsed in 2022, according to experts at Deutsche Bank Research. Consequently, $40 billion was lost by investors. The USDC peg that Circle had with the US dollar was severed in the spring of 2023 when American Silicon Valley Bank went bankrupt.
Such events, according to German bank analysts, show how unstablecoins are and make one wonder what the future holds for this asset. A poll of 3,350 customers found that 42% of people think stablecoins will eventually go away entirely. Pupils make up just 18% of the sample.
Experts at Deutsche Bank claim that non-algorithmic stablecoins can benefit from historical data on pegged currencies due to the similarities between these assets. Professionals from financial institutions have voiced concerns regarding the long-term viability of Tether’s USDT stablecoin due to the lack of clarity surrounding the sufficiency of the collateral.
Earlier, Tether reacted by stating that the bankers’ report “lacks clarity, substantial evidence, and relies on vague statements rather than rigorous scientific analysis” and yelling:
Some question Deutsche Bank’s credibility as a financial industry critic due to its history of fines and sanctions. This financial organization is the most precarious in the world, according to the International Monetary Fund.
The experts at Deutsche Bank had previously predicted that the market would be flat for a while following the Bitcoin halving. A flat is defined as an asset’s price remaining relatively stable for an extended period of time.