GLOSSARY // Crypto
Stablecoin
A stablecoin is a crypto token designed to hold a fixed value, almost always $1, so people can move money on a blockchain without riding Bitcoin's volatility. The largest ones, like USDC and USDT, claim to back each token with a dollar or equivalent reserves held off-chain.
The stability is only as good as the backing. A fully reserved stablecoin holding cash and short Treasuries is one thing; an algorithmic stablecoin that tries to hold its peg with code and incentives is another, and several of those have collapsed to zero. When a stablecoin trades at $0.97, the market is voting that the promised $1 might not be there.
A trader who sells Bitcoin at $90,000 into USDC parks the proceeds as 90,000 tokens worth about $1 each, avoids converting back to a bank, and can buy again in seconds. The tradeoff is trusting that USDC's issuer actually holds the reserves.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.