Stablecoins Offer a Way to Protect Against Inflation 09/02/2025 | | | If you say these two sentences to your broker today... you could make 122% trading Apple, Amazon, American Express and many other S&P 500 blue chips too. Click here to see what these sentences are. Click Here... | | | | Stablecoins offer a way to protect against inflation, especially amid tariffs.
How to define stablecoins can be addressed by categorizing them as cryptocurrency whose value is pegged to another asset like a fiat currency, such as the U.S. dollar of the euro. Stablecoins also can be aligned with gold as another way to maintain a stable price.
A key difference is that fiat currency is based on government backing rather than a physical commodity such as gold or silver, allowing central banks around the world to exert control over economic conditions by using liquidity and interest rates. Stablecoins provide an alternative to volatility shown by cryptocurrencies, thus potentially offering advantages for common transactions. In addition, stablecoins serve as bridge currency to help crypto traders switch between volatile assets, according to Kraken.com.
In addition, Stablecoins can be used in various blockchain-based financial services and to pay for goods and services. But using the term "stablecoin" literally is a bit of a misnomer, since there is no guarantee that it hold a steady value in relation to the the fiat currency or gold when traded on secondary markets. Nor is there assurance any reserve of assets, if used, will be adequate to satisfy all redemptions, according to Coinbase Global, Inc. (NASDAQ: COIN).
Fully backed by U.S. dollars and U.S. dollar equivalents, USDC was developed to represent a U.S. dollar equivalent onchain, and is used to send, store and receive money between people and businesses without the need for third-party financial institutions.
Chart courtesy of www.stockcharts.com.
Stablecoins Offer a Way to Protect Against Inflation: New Stablecoin Ventures
New stablecoin projects are rolling out. Reflect Money announced on Tuesday, Sept. 2, that it had a $3.75 million seed round led by a16z crypto's CSX accelerator, with participation from Solana Ventures, Equilibrium, BigBrain Holdings and Colosseum.
Also on Sept. 2, Asia showed innovation in the global crypto-finance landscape, with Hong Kong reclaiming its historical niche as a regulated gateway linking traditional finance with digital assets. Institutional interest is rising for compliant, algorithmically driven Bitcoin exposure, evidenced by sovereign wealth funds increasing Bitcoin allocations and Hong Kong-based fintech firms raising more than $1.5 billion to support crypto infrastructure and stablecoin frameworks.
Next-generation platforms such Solowin Holdings (NASDAQ: SWIN), which melds licensed crypto infrastructure, quantitative strategies and access to Asia's high-net-worth investors, are poised to capitalize on the structural shift. Solowin Holdings joins other tech-savvy companies -- including Coinbase Global, Bit Mining Ltd. (NYSE: BTCM), Bakkt Holdings Inc. (NYSE: BKKT) and Marathon Holdings Inc. (NASDAQ: MARA) -- in focusing on strengthening their positions in a rising sector.
Stablecoins Offer a Way to Protect Against Inflation: Carlson's Counsel
The recently passed U.S. GENIUS Act, signed into law by President Trump on July 15, sets rules for a type of digital currency known as a stablecoin," wrote Retirement Watch investment newsletter leader Bob Carlson, a retired pension fund chairman. A stablecoin is a digital token that is backed by assets, he added.
The GENIUS Act is supposed to reduce the ability of stablecoin issuers to commit fraud or issue tokens that lack sufficient asset backing, according to Retirement Watch. The law also prohibits stablecoin issuers from offering interest or other payments to users. The coins are supposed to be used for payments, not as investments.
"The Genius Act requires 100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries and compels issuers to make monthly, public disclosures of the composition of reserves," according to the White House. "Stablecoin issuers must comply with strict marketing rules to protect consumers from deceptive practices. Crucially, they are forbidden from making misleading claims that their stablecoins are backed by the U.S. government, federally insured, or legal tender."
In the stereotypical stablecoin, an issuer takes money from users and buys U.S. Treasury bills with that money, Carlson commented.
"The issuer receives and keeps any interest earned on the treasury bills," Carlson counseled. "The bills are sold when users redeem the stablecoins or transfer them to someone else, such as to pay for goods or services. Banks already are objecting that there are loopholes in the law."
Bob Carlson heads Retirement Watch.
Financial institution leaders argue that it's possible for stablecoin issuers to effectively pay interest or provide other benefits to users, Carlson cautioned. That would allow stablecoins to compete with interest-bearing accounts from banks, but the new law is supposed to prevent it, he added.
Bank officials are concerned stablecoins that pay income would cause depositors to shift from bank accounts to stablecoins, Carlson cautioned. Banks also face a threat because major businesses, such as Walmart (NYSE: WMT), have indicated they are exploring creating their own stablecoins.
If Walmart were to create it own stablecoin network, it could persuade many of its customers to use stablecoin when making purchases at Walmart or on its website, Carlson continued.
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"The usual outcome for tariffs is inflation and inflation brings depreciation of the U.S. dollar," said Michelle Connell, who heads Portia Capital Management in Dallas. "There are a plethora of stablecoin investments, but I would stick with those that have the largest user base and a good track record."
Connell told me that her top stablecoin choice is Circle's USDC, or USD Coin. As the ticker notes, this stable coin is pegged to the U.S. dollar, she added.
"USD Coin has a solid reputation for transparency and compliance," Connell said. "Its liquidity is provided by U.S. dollars and dollar equivalent investments."
Chart courtesy of crypto.com.
When Coinbase Global, Inc. reported results recently, the company announced that $61 billion of USDC was currently in circulation, Connell said. That's a 90% growth rate compared to the previous year, she added.
In 2019, after helping launch USDC, Coinbase introduced a Bootstrap Fund to help DeFi developers establish liquid marketplaces. The fund helped seed onchain liquidity for USDC across a variety of blue-chip DeFi protocols, such as Uniswap, Compound and dYdX, helping drive robust liquidity in the early innings of DeFi, Coinbase reported.
Since then, USDC has become a "leading stablecoin in DeFi" with an estimated $8.9 billion in Total Value Locked (TVL) and $2.7 trillion in annual onchain volume, Coinbase announced. USDC powers ecosystems across Ethereum, Base, Solana, Hyperliquid, Sui, Aptos and others. Coinbase is committed to accelerating further stablecoin adoption, its leaders indicated.
Coinbase has monthly audits performed by independent firms. In addition, BlackRock is responsible for tracking USDC's portfolio composition information, Connell counseled.
Michelle Connell heads Portia Capital Management.
Stablecoins Offer a Way to Protect Against Inflation: Wisdom from Woods
Ether, also know as Ethereum, is one of the cryptocurrencies that is gaining appeal. Another rising cryptocurrency is Solana, with better-known Bitcoin showing short-term pricing weakness.
Ethereum is possibly the "favorite cryptocurrency" right now of Jim Woods, who heads the Crypto & Commodities Trader advisory service that recommends both stocks and options, as well as the Investing Edge investment newsletter. The Ethereum platform and network continue to expand "throughout the global economy," he added.
Woods used a baseball analogy to describe the prospects for Ethereum's ascent. He forecast that Ethereum is in the "second or third inning" of a nine-inning gain.
"We haven't even batted through the order yet," Woods advised his Crypto & Commodities Trader subscribers.
Jim Woods heads Crypto & Commodities Trader.
Stablecoins Offer a Way to Protect Against Inflation: Trump Bump
Cryptocurrencies have exhibited volatility both up and down, despite the Trump administration ushering in policies to give Bitcoin an upward bump. With President Trump leading the cryptocurrency policy flotilla, both investors and traders have gained a figurative gust of wind that led Bitcoin to hit a new high of $124,450 on Thursday, Aug. 14, before sliding to $107,906.50 late in the day on Friday, Aug. 29, then turning upward to $111,230.00 on Tuesday, Sept. 2.
After President Donald Trump won election to his second term in November 2024, the price of Bitcoin rose from roughly $70,000 to pass $124,000 on Aug. 14 but has faced volatility. The rise never is steady with Bitcoin, nor Ethereum or Solana, so investing in them requires patience and a willingness to resist panic-selling if a downturn occurs.
"Everyone is a disciplined, long-term investor until the market goes down," former Presidential candidate Steve Forbes once told me during an interview.
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Ether hit a low of under $1,500 in mid-April. Then, it began a strong run. It set new 52-week highs recently and neared its all-time high in 2021. During Ether's latest gains, it left Bitcoin far behind in percentage increase.
Currently, Ether is in second place to Bitcoin, despite the latter's recent pullback, wrote Retirement Watch investment newsletter leader Bob Carlson, a retired pension fund chairman. There are quite a few digital currencies, with many created almost every day. Relatively few of the digital currencies last, Carlson cautioned.
A distinguishing feature of Ethereum and Bitcoin is that the Securities and Exchange Commission has approved exchange-traded funds (ETFs) that buy the currencies at spot prices, Carlson continued.
One way for income investors to capitalize on Ethereum is to do so through "staking." That technique provides a current estimated reward rate of 1.86%. It means that, on average, stakers of Ethereum earning about 1.86% if they hold an asset for 365 days. Today, the staking ratio, or the percentage of eligible tokens currently being staked, is 29.64%, according to Coinbase Global Inc. (NASDAQ: COIN).
There are 35.8 million of Ethereum staked, meaning the cryptocurrency has a staking market cap of $155.9 billion.
"This is compared to a total asset market cap of $526.2 billion," according to Coinbase.
An ETF that does not offer income but buys Ethereum is iShares Ethereum Trust (ETHA), which has gained 23.28% so far this year, 16.40% in the last month and 74.22% in the last year.
Chart courtesy of www.stockcharts.com.
Stablecoins Offer a Way to Protect Against Inflation: Skousen's Strategies Include Solana
The Genius Act, supported by President Trump, is just one reason for the growing opportunities created by an investment opportunity, according to the TNT Trader advisory service led by Mark Skousen, PhD, and his son Tim Skousen. TNT Trader currently recommends Solana and Bitcoin.
Mark Skousen, head of TNT Trader and Forecasts & Strategies, meets with Paul Dykewicz.
The market has seen signs that Solana will quickly follow with big moves, Skousen advised his subscribers. Solana has been volatile. Near the market's close on Aug. 16, Solana had jumped 5.31% to $197.25 in the prior eight hours. Early in the morning of Friday, Aug. 29, Solana fell 5.09% to $206.06, but jumped to $209.20 on Sept. 2 when it soared 6.74% that day. Cryptocurrency investors need to brace for such volatility.
Stablecoins Offer a Way to Protect Against Inflation: Geopolitical Risk
Both investors and traders still face a threat from geopolitical risk. President Trump said on Sept. 2 that he is "very disappointed" in Russia's President Vladimir Putin and renewed talk about taking punitive action against Russia if it keeps attacking civilians and continuing its three-plus-year invasion of Ukraine.
The Trump administration last week approved a $825 million arms sale to Ukraine for extended-range missiles and other equipment to aid its defensive capabilities. The State Department announced Thursday, Aug. 28, that it notified Congress about selling extended-range attack munition missiles and navigation systems to Ukraine. The sale would include related spare parts, components and other accessories, as well as training and technical support.
Ukraine officials announced plans to use funds from United States and NATO allies Denmark, the Netherlands and Norway to pay for the equipment. The proposed sale will support the foreign policy and national security objectives of the United States by improving the security of a "partner country" that is a force for political stability and economic progress in Europe, according to the State Department.
President Trump and Russia's President Vladimir Putin concluded talks Friday, Aug. 15, without finalizing a peace plan or ceasefire in Ukraine. At a joint news conference following their three-hour meeting at the Joint Base Elmendorf-Richardson Anchorage, President Trump said "many points" were agreed upon, but several remained unresolved.
In July, the Trump administration announced two other proposed weapons sales to Ukraine, with one worth $322 million to lift air defense capabilities and provide armored combat vehicles, while the second, worth $330 million, for air defense systems, maintenance, repair and overhaul of self-propelled artillery vehicles.
President Trump had talked optimistically before his latest administration began in January 2025 that he could end Russia's invasion of Ukraine soon after taking office, but Putin has thwarted the effort. In the meantime, Russia has intensified its attacks, hitting civilian sites across Ukraine and gaining control of additional sovereign territory in its neighboring nation.
With the war in Ukraine and the conflict in the Middle East continuing hot spots, investors need to factor in geopolitical risk. President Trump recently spoke with President Zelensky, among other European leaders, but they cannot secure peace without Putin agreeing. With no peace at hand, investors and traders need to factor geopolitical risk into their decision making. | | | Sincerely,
Paul Dykewicz, Editor
StockInvestor.com
| | About Paul Dykewicz: Paul Dykewicz is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul also is the author of an inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain", with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz. | | | | | |
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