Stablecoins: The ultimate solution for navigating through the volatility of the crypto market

Aug 1, 2023

In the world of cryptocurrencies, volatility is the name of the game. We've all witnessed those heart-stopping moments when the prices of Bitcoin, Ethereum, and other digital assets skyrocket or plunge within a matter of hours. These wild price swings can leave investors on the edge of their seats, uncertain about the future of their investments.

When the crypto market experiences high volatility, the prices of cryptocurrencies can fluctuate significantly in short periods. Converting crypto assets to stablecoins during turbulent times indeed can be a smart strategy to preserve the value. Let’s dive deeper into why stablecoins can be a great solution for investors in such situations.

Stablecoins, as the name suggests, are digital assets that are designed to maintain a stable value. They achieve this stability by being backed, pegged or referencing an underlying asset, such as a fiat currency or even commodities like gold. As a result, stablecoins provide a way to avoid the volatility of the crypto market (unless the underlying asset becomes volatile, which is unlikely in case of conservative assets such as gold) while still staying within the cryptocurrency ecosystem.

By converting crypto assets into stablecoins, you can effectively “park” your investment in a more stable form. During turbulent times, you can wait out the market fluctuations without the fear of losing the value of your original investment. Stablecoins act as a temporary safe haven for your funds, allowing you to maintain your exposure to the crypto market while minimizing potential losses.

Stablecoin is quite a liquid asset and you should be able to easily convert your stablecoins back to the original cryptocurrencies or any other asset you prefer. This flexibility makes stablecoins an attractive option for investors who want to navigate the volatile crypto market with more confidence and control.

It’s important to note that not all stablecoins are created equal, and their stability mechanisms can vary. Some stablecoins rely on centralized entities to maintain the peg, while others leverage decentralized smart contracts and algorithms. It’s essential to conduct thorough research and choose reliable stablecoins with transparent mechanisms, sufficient amounts of underlying reserves (preferably conservative ones) and trustworthy issuers.

Why VNX Gold, VNX Euro and VNX Swiss Franc?

VNX developed a range of stable digital assets that can fit different needs in the digital economy: VNX tokens referencing traditional currencies – VNX Euro (VEUR) and VNX Swiss Franc (VCHF) – are multichain tokens that reference the relevant fiat currencies (EUR and CHF) that enable the holders to trade in native currencies as well as manage their portfolio more effectively and hedge against volatility on the crypto market. VNX Gold (VNXAU) is a multichain token that represents ownership of 1 g of physical gold stored in a vault in Liechtenstein. VNX Gold offers the same benefits as gold, such as the store of value, protection against volatility and inflation, and high liquidity – with complete digital convenience and freedom.

The tokens are deployed on several blockchains, providing enhanced interoperability and flexibility, and giving an opportunity to easily bridge between blockchains.

VNX is registered under TVTG by the Liechtenstein Financial Market Authority and keeps its tokens always supported by the relevant amount of reserves to ensure a minimum parity according to the principles of the market. The physical gold reserve is held in the segregated vault in Liechtenstein. Other asset reserves are held in Swiss and Liechtenstein banks. Backed by tangible assets and operating within a solid regulatory framework, VNX offers a secure and trustworthy option of stable digital assets.