DEFI Activity, Stablecoins, and the Impact on Price Volatility: Part 4 [Report]

In Part 4, we move beyond correlation to rigorously assess causality. We now investigate whether past stablecoin lending activities genuinely forecast future Ethereum volatility changes. Leveraging advanced statistical methodologies - including Autocorrelation (ACF), Partial Autocorrelation (PACF), Granger causality tests, and enhanced predictive modeling - we aim to determine if stablecoin lending not only coincides with volatility but actively drives it. By establishing clear predictive relationships, our analysis provides traders, investors, and risk managers with precise, actionable insights into the mechanisms underlying market volatility, enabling improved strategic decision-making in the rapidly evolving DeFi landscape.

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