The collapse of the cryptocurrency market continued this Thursday with more than $ 200 billion in record losses in a single day. The leading cryptocurrency on the market, bitcoin thus fell below the $ 26,000 mark for the first time in 16 months. With the cryptocurrency backing up Terra’s UST stable, investors are now scared of the second worst fall. Details in the following.
Panic is starting to hit the cryptocurrency market
Early on the morning of May 12, bitcoin took a big hit to reach $ 25,401.29 according to Coin Metrics data. This is the first time in 16 months since it took off go back to December 26, 2020 to see the cryptocurrency trading at such prices. The second most important cryptocurrency on the market, Ether followed the same trend, falling to $ 1704.05. So the altcoin fell below the $ 2,000 mark for the first time since June 2021.
Unprecedented price levels for this year continue following the publication of inflation data in the United States. Released the day before, the data showed that prices for goods and services jumped 8.3% in April, a figure above analysts’ expectations and close to the highest level in 40 years. The announcement took a deep toll on the stock markets and gave investors this making huge liquidations in the cryptocurrency market.
Investors fear fall from UST collapse
The day was all the more difficult for traders as UST Terra fell to less than 30 cents, which strongly affected stablecoins. USDT also broke below its $ 1 benchmark on Thursday, going as far as hitting 95 cents temporarily. Unlike the latter, Terra’s UST is an algorithmic stablecoin whose reserve is backed by a number of assets, including bitcoin.
Do Kwon, the founder of Terra, has also set a $ 10 billion target of bitcoins, and their acquisition was entrusted to the Luna Garda Foundation. Although the UST reserve now holds 80,394 BTC, investors fear that some of these BTCs will sold to cover stablecoin losses. Such a scenario could be disastrous for bitcoin that is already undergoing market sales.
Bitcoin finally climbed over $ 26,000 during the day and is currently trading around $ 28,650. Despite this rebound, the cryptocurrency is down more than 50% from the most recent high, bringing the percentage of Bitcoin launches in profit to its lowest level in two years.
Get a summary of news in the world of cryptocurrencies by subscribing to our new daily and weekly newsletter service so you don’t miss any of the essential Cointribune!
Luc Jose Adjinacou
Far from dampening my enthusiasm, an unsuccessful investment in cryptocurrency in 2017 only increased my enthusiasm. So I decided to study and understand the blockchain and its many uses and put forward my pen information related to this ecosystem.