The market in the crypto circle has been quiet at the end of the year, but instead, the sharp fluctuations in exchange rates have given everyone a harsh lesson. The recent rally of the offshore RMB has been quite fierce, soaring from 7.35 at the beginning of the year to around 6.93. For those holding stablecoins, this is not good news.

To give a real example, if you had 1 million USDT at the start of the year, converting it to RMB at that time would have netted you 7.35 million. Now, if you convert again? Only 6.93 million. In one year, 420,000 has quietly evaporated. This amount is enough for a down payment on a house in second- or third-tier cities, or for a few months of fun in Beijing, Shanghai, or Guangzhou. Many people think stablecoins are truly "rock solid," but in fact, there is a huge cognitive trap — stablecoins are pegged to the US dollar, not the RMB. Ultimately, we still need to exchange these coins into RMB to use them, so the fluctuations between the US dollar and RMB become the real hidden risk within stablecoins.

So why did the RMB suddenly strengthen so strongly at the end of the year? There are two forces at play. On one hand, the US dollar index has fallen quite sharply this year, approaching a 10% decline. The expectation of Fed rate cuts is becoming more certain, weakening the US dollar’s appeal as a global reserve currency, and other currencies are naturally appreciating relative to it. On the other hand, at year-end, domestic companies are consolidating foreign exchange settlements, which also creates significant demand for RMB, directly boosting its demand side.

This wave of exchange rate fluctuations highlights a core issue: many people’s understanding of stablecoins still remains superficial. Those who have truly been involved in crypto assets for the long term understand that stablecoins are essentially digital forms of the US dollar. Their risk does not lie in the coins themselves but in the exchange rate expectations between the US dollar and the local fiat currency. If you plan to hold coins long-term, you must have a clear understanding of this invisible risk.