Cryptocurrency melee in 2025: Bitcoin is an asset, stablecoins are fraught with risks

Author: Sally; Source: Blockchain Headlines

In his article "Bitcoin, stablecoins and central bank digital currencies should not be compared", Wang Yongli, former vice president of the Bank of China, deeply analyzed the essential differences and characteristics of Bitcoin, stablecoins and central bank digital currencies.

Bitcoin is an asset rather than a currency, and it is difficult to serve as a currency reserve

Since its birth, Bitcoin has attracted the attention of many investors around the world with its decentralization and constant total amount. However, Wang Yongli pointed out that Bitcoin can only be regarded as an asset, not a real currency. Although Bitcoin is not worthless, it has built a unique decentralized ledger system with the support of blockchain technology, making its transaction records traceable and difficult to tamper with, which to a certain extent meets the pursuit of asset privacy and independence by some investors. However, the price fluctuation of Bitcoin is very drastic. For example, in 2024-2025, its price sometimes rises sharply and sometimes falls sharply. It once reached 99,000 US dollars per coin, but then it frequently fell back by a large margin. For example, in March 2025, Bitcoin fell below the key price several times. On the morning of March 11, it fell below the 80,000 US dollar mark, and fell by more than 5% in 24 hours.

Such a large price fluctuation makes it difficult to measure the value of Bitcoin stably, and it cannot meet the most basic requirements of currency as a value scale and medium of exchange. Moreover, in the long run, there is still great uncertainty in the price of Bitcoin. On the one hand, it is affected by the global macroeconomic situation and the adjustment of monetary policies of various countries. For example, changes in the monetary policy of the Federal Reserve will lead to changes in market liquidity expectations, which in turn affect investors' demand and price for Bitcoin; on the other hand, the slightest change in regulatory policies, such as the restrictions on Bitcoin transactions or changes in the recognition attitude of some countries, will also directly cause large fluctuations in the price of Bitcoin. Therefore, if Bitcoin is used as a currency reserve, it will undoubtedly put financial security at great risk. Once the price of Bitcoin plummets, the value of the currency reserve will be severely damaged, which may trigger a series of chain reactions in the financial system.

Stablecoins are tokens pegged to currencies, and supervision and risks coexist

The emergence of stablecoins aims to solve the problem of excessive price fluctuations in the cryptocurrency market, and attempts to maintain a relatively stable value by pegging it to legal currency or other assets. Wang Yongli believes that stablecoins are essentially tokens pegged to currencies, with USDT and USDC, which are pegged to the equivalent of the US dollar, being the most typical. Stablecoins have a certain rationality. They provide a relatively stable value scale and transaction medium for the cryptocurrency market, facilitate transactions and exchanges between encrypted assets, and promote the development of the cryptocurrency market to a certain extent, so that investors have a relatively stable asset choice when the market fluctuates, reducing the risks caused by large price fluctuations.

However, at present, the regulatory laws and regulations surrounding stablecoins are not sound, and the actual supervision is not strict enough. Many stablecoin projects have loopholes in the transparency of token reserves and the supervision of capital flows, which brings potential risks to the market. Moreover, the trading of stablecoins has rapidly extended to various derivatives. Due to the lack of effective supervision and risk control mechanisms, once the market fluctuates, these derivative transactions may trigger a chain reaction, causing the risk to be rapidly amplified. For example, when the value of the pegged asset fluctuates, or the credit of the stablecoin issuer is questioned, the stablecoin may be de-anchored, that is, its value no longer maintains a stable exchange rate with the pegged currency, which will seriously affect investor confidence, trigger market panic and sell-offs, and then impact the entire cryptocurrency market and even the traditional financial market.

Central Bank Digital Currency is the Digitalization of Sovereign Currency, and Can Learn from the Stablecoin Technology System

In Wang Yongli's view, the central bank digital currency should be a digital form of sovereign currency, and it is more appropriate to call it "sovereign digital currency". It is backed by national credit and has legal compensation and compulsory nature like traditional paper currency, and is an important part of the national monetary system. Issuing central bank digital currency can improve the efficiency of currency issuance and circulation, reduce the costs of traditional paper currency issuance, transportation, storage and other links, and also help strengthen the supervision of currency circulation and improve the effectiveness and accuracy of monetary policy.

In terms of the path selection to promote the development of central bank digital currency, Wang Yongli proposed that it might be possible to learn from the technical system of stable currency to transform sovereign currency. Stable currency has accumulated certain experience in the application of blockchain technology and the execution of smart contracts. By reasonably learning from these technologies, the technical architecture of sovereign digital currency can be more perfect, and it can be launched and put into use more quickly. Once the sovereign digital currency is successfully launched, it will gradually replace the role of stable currency in the market with its authority and stability, and no longer need to rely on special tokens to achieve value stability and transaction circulation, thereby further regulating the digital currency market and maintaining the stability of the financial order.