A meltdown in one of the biggest stablecoin, TerraUSD shook cryptocurrency markets. Tether plunged below U.S. dollar peg and bitcoin fell in 16-months lows. The U.S. inflation is not looking good this week. Investors worry about the aggressive economic impact due to central bank tightening. So, cryptocurrencies are in sell-off risk assets.
The combined market value of all cryptocurrencies in the sell-off is $1.2trn. It is less than half since last year. Tether is supposed to be pegged 1:1 U.S. dollar, as a stable coin. But it crashed to 95 cents low in the global session. Janet Yellen, the U.S. The Treasury Secretary is confident that volatility in stablecoins will not affect financial system risk.
She delivered a speech during a House Financial Services Committee. This case does not give real threat to financial stability. However, it would increase significantly, showing the kind of risk that the bank is encountering. Bitcoin for instance, is the biggest cryptocurrency. It plunged to $25.401.05. The last down was at $28.751 at 0.9 percent.
In the past eight sessions, a quarter of its value has been lost. So, around $10.700 fell 37 percent. The trading is far below the peak of $69.000, said Reuters. Based on Refinitiv data, Bitcoin and Nasdaq correlation has been increasing recently at the highest level. The Nasdaq composite has fallen around 8 percent this month.
The world’s second-largest cryptocurrency, Ether, also fell since June 2021 for as low as $1700. Turmoil in TerraUSD led to the breaking of its peg. It led to a 31 cents decrease and the trading was around 38 cents. Terra developers in this case delayed the network’s blockchain to avoid attacks following its logarithmic disruptions.
