Stablecoin vs. Bitcoin – Understanding Their Differences and Uses

We've written extensively about stablecoin crypto in molecula.io blog, covering their basics, safety and stability, and yield generation possibilities. We also noticed a recurring theme in Reddit and other socials, like: "How do stablecoins compare to Bitcoin?" It's clear that this comparison really piques your interest.

So, let's dive into the Bitcoin vs stablecoin debate.

Both are cryptocurrencies, but their roles in the digital finance ecosystem couldn't be more different. Bitcoin, with its over $1 trillion market cap, is the poster child of crypto volatility and speculation. Stablecoins, including euro stablecoins, on the other hand, quietly processed $1.3 trillion in transactions by September 2024 and market cap $170.8 billion by Sept 10th `24, approaching Bitcoin's $1.44 trillion volume.

This article cuts through the noise, giving you the clear-cut between stablecoin and bitcoin you've been asking for. We'll explore the intricacies of bitcoin stablecoin relationships and answer the burning question: in the bitcoin vs stablecoin showdown, which one comes out on top?

Bitcoin is NOT a stablecoin. Period. This table can help you understand their fundamental differences in the bitcoin stablecoin comparison:

Bitcoin is highly volatile but it gives great opportunities. In January 2025, Bitcoin hit a record high of $108,099 after Donald Trump's re-election. But things haven’t been all smooth sailing. Since Trump’s inauguration Bitcoin’s price dropped over 20% from its peak to just above $86,500.

The turbulence? A mix of uncertainty over Trump’s tariff plans and the usual wild swings the crypto market is known for. But here’s the kicker: not everyone is spooked. Plenty of analysts are still bullish, saying Bitcoin could soar to $250,000 this year if the Trump administration rolls out favorable policies.

It’s a classic case of Bitcoin being Bitcoin - volatile, unpredictable, but also packed with potential for those willing to take the risk.

Interestingly, despite being referred as "digital gold," Bitcoin's correlation with gold averaged just 0.28 between 2011-2024, proving this popular narrative wrong.

Bitcoin vs Gold Price Correlation

Stablecoins were created to prove price stability in the cryptocurrency ecosystem. The March 2020 market collapse illustrates that: while USDT, one of the safest crypto stablecoins, kept amazing stability, changing only 2% from its dollar peg, while Bitcoin fell 37% in only 48 hours. This contrast underscores their different roles and design philosophies in the stablecoin vs crypto debate.

Stablecoins maintain their pegs through various backing techniques - fiat reserves, cryptocurrency collateral, or algorithmic balancing. Bitcoin gets its value from network effects and digital scarcity.

Stablecoin crypto market share grew from 13.8% to 16.3% and Bitcoin fell more than 60% during the 2022 crypto market collapse. Smart investors use this inverse correlation for portfolio diversification and risk management across various market conditions.

“Digital currencies like Bitcoin and Ethereum are tremendously volatile, which makes pricing things in their terms very difficult. Stablecoins avoid this issue by locking their prices to a known reserve currency.“

Anthony Citrano, founder of Acquicent

Both Bitcoin and stablecoins use blockchain technology, creating a basic resemblance that confuses many newcomers. When Terra/LUNA collapsed in May 2022, Bitcoin's price fell 18% within a week despite having no connection to this failed algorithmic stablecoin. This incident showed why knowing the difference in stablecoin vs crypto matters during market downturns.

Bitcoin commands attention in news headlines while stablecoin crypto discussions often take a backseat. This study indicates that between 2013 and 2019, media references were mostly "Bitcoin" and "Crypto." This creates an availability bias. People assume Bitcoin symbolizes other cryptocurrencies or wrongly attach its characteristics to stablecoins.

Investors are also influenced by the "halo effect". Though research on crypto cognitive biases remains limited, this psychological pattern appears consistently. "Recency bias" also shapes crypto understanding. A University of Cambridge study found 72% of retail crypto investors based decisions on price movements from just the previous week, often mixing up short-term trends across different assets.

Originally, Bitcoin's whitepaper described it as a "peer-to-peer electronic cash system," implying consistency. Still, its price fluctuations are well-known. USDT and USDC, on the other hand, aim especially to keep a steady 1:1 link with the US dollar.

Bitcoin stablecoin connections are quite related. As of March 27, 2025, Binance's 24-hour trading volume for BTC/USDT was approximately $1.47 billion.

While Bitcoin is well known, stablecoins are still very misunderstood. While Bitcoin is well known, stablecoins are still very misunderstood. ​Recent data indicates that public awareness of stablecoins remains limited. According to the UK's Financial Conduct Authority (FCA) Cryptoassets Consumer Research 2024 (Wave 5), while 93% of UK adults have heard of cryptoassets, only 31% recognize Ethereum, and awareness of other cryptoassets is even lower.

Bridging the knowledge gap in stablecoins is important for any serious crypto investor or user. Around 90% of central banks are exploring Central Bank Digital Currencies (CBDCs), and most don't want to be left behind by bitcoin and other cryptocurrencies. So, it is the ultimate moment to follow their steps!

You can start by checking Coinbase Learn. It easily explains the concepts of digital currencies and blockchains.

The Binance Academy educates crypto beginners, introducing them to key concepts and terms.

Coindesk provides analytics, crypto news, podcasts, research, and 101 articles.

Always check strong analytics, specifically if it’s brought to you by DeFi demystifiers like DeFi Rate.

And, last but not least, Molecula.io blog offers profound knowledge in DeFi Academy.

When exploring these resources, focus on understanding the different types of stablecoins and their market shares.As of March 2025, fiat-backed stablecoins dominate the market with approximately 84% share, followed by crypto-backed (around 15%) and algorithmic (less than 1%) stablecoins, with the latter experiencing the highest instability. Algorithmic stablecoins had the most de-pegging incidents, including the 2022 UST collapse, while fiat-backed and crypto-backed stablecoins remain generally more stable but are not immune to temporary de-pegs.

Online communities can provide valuable insights, but verify information carefully. A 2024 study published in the International Journal of Bank Marketing found that social media platforms are often hotspots for misinformation and fraud, with users of platforms like YouTube, Reddit, Twitter, and Clubhouse being more likely to invest in cryptocurrencies, potentially influenced by misleading information. Additionally, a 2024 study highlighted that social media platforms, while increasing public awareness of cryptocurrencies, have also amplified challenges such as misinformation and impulsive investment behaviors.

Remember, the stablecoin space changes every day. Continuous learning is key to navigating this dynamic sector of the crypto market effectively.

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