With the rise of stablecoins, is Bitcoin hanging by a thread or still stable?

With the advancement of stablecoin legislation, the crypto industry seems to be entering a festive mode. The mainstream view holds that stablecoins provide a channel for more funds to "go on-chain," and the value of Bitcoin will continue to rise. However, another voice is also emerging—when sovereign currencies actively seize the crypto battlefield, decentralized Bitcoins may also fall into an existential crisis. Could stablecoins potentially become the "grave digger" of Bitcoin?
Wang Yingbo, a digital economy scholar at the Shanghai Academy of Social Sciences, analyzed for the 21st Century Business Herald that the United States is accelerating its regulatory legislative actions, which clearly indicates that the U.S. government has recognized the significant trend of currency digitization and is aware that the digitization of currency is an important measure to further solidify the dollar's dominance. However, digitization must involve the comprehensive digitalization of the dollar, which is the core background behind the passage of the Genius Act and the listing of stablecoin issuer Circle. The USDC launched by Circle must have its core reserves composed of 100% dollar assets, including dollar cash and short-term government bonds, while cryptocurrencies like Bitcoin are explicitly excluded. In Wang Yingbo's view, in the long term, the launch and widespread adoption of USDC and stablecoins based on various sovereign currencies are merely a matter of time.
As cryptocurrencies are excluded from reserve assets, the speculative drive supporting the rise of Bitcoin will gradually dissipate, ultimately likely leading to the marginalization of Bitcoin. Bitcoin has always been a non-yielding speculative asset, and its valuation heavily relies on market confidence. Once confidence collapses, the price collapse is to be expected due to the lack of stable cash flow support. If a short-term surge is followed by a drop, it could trigger massive sell-offs. In the long term, asset prices are still based on cash flow discounting, and non-yielding assets have no investment value; this is true for both gold and Bitcoin. However, those with an optimistic view firmly believe in the rise of stablecoins, which in fact still provides a huge traffic entrance for Bitcoin.
Liu Honglin admitted that in terms of "transaction functions", stablecoins are indeed a squeeze on Bitcoin. However, from the perspective of "asset allocation", the explosion of stablecoins is actually paving the way for Bitcoin. Many people enter the world of crypto assets for the first time by purchasing stablecoins to bypass local banking systems, and once they have a basic understanding of on-chain assets, the next step will naturally lead them to consider issues like asset preservation, inflation resistance, and hedging, which stablecoins cannot solve, but Bitcoin precisely provides solutions for. Therefore, from the perspective of "entry points", stablecoins are more like liquidity distributors; they are not competing with Bitcoin, but rather helping to direct traffic to it. According to Ding Zhaofei, the global trend of stablecoin compliance will not only attract more "quasi-dollar" funds to flow in but will also further strengthen the hedging and value storage attributes of core assets like Bitcoin, once again proving Bitcoin's uniqueness as "digital gold". At the same time, the advancement of compliance will open the door to crypto assets for traditional capital markets. Long-term capital such as pension funds and mutual funds can enter the market through mature compliance channels. Moreover, the decentralized nature of Bitcoin may actually become a unique competitive advantage that distinguishes it from stablecoins. Liu Honglin added that in the future, if stablecoins are heavily regulated, requiring real-name systems, transparent reserves, or even prohibiting on-chain anonymous transactions, then Bitcoin, as a "native decentralized asset", may become an irreplaceable choice.
In simple terms, when users choose their asset allocation, they will be clearer about whether they want a compliant stablecoin that is anchored to national credit and has low volatility, or a digital store of value that is resistant to censorship, depreciation, and has global circulation.