Home News $ 200 billion disappeared in one day. The cryptocurrency market, in...

$ 200 billion disappeared in one day. The cryptocurrency market, in free fall

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The price of bitcoin fell to $ 25,401.29 on Thursday morning, according to Coin Metrics. This is the first time the cryptocurrency has fallen below $ 27,000 since December 26, 2020.

Subsequently, Bitcoin reduced its losses by trading at $ 29,413.08 per unit, down 0.1%.

Ether, the second largest digital currency, fell to $ 1,704.05 per unit. It is the first time the currency has fallen below the $ 2,000 threshold in June 2021.

Ether later recovered from a loss of 6.5% at a price of $ 1,988.45 per unit.

Investors are fleeing cryptocurrencies at a time when stock markets have fallen to the pinnacle of the coronavirus pandemic due to fears of rising prices and deteriorating economic prospects.

US inflation data released on Wednesday showed that prices for goods and services rose 8.3% in April, more than analysts had expected, and close to the highest level in 40 years.

Traders are also worried about stablecoin coins, such as Terra. TerraUSD, or UST, is expected to mirror the value of the dollar, but fell to less than 30 cents on Wednesday, shaking investor confidence in the so-called decentralized financial space.

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Stablecoin coins are like bank accounts in the crypto world that are barely regulated. Digital currency investors often turn to them for security in times of market volatility. But the UST, an “algorithmic” stable currency coin, which is backed by code rather than cash held in a reserve, has struggled to maintain a stable value as holders rushed to withdraw en masse.

On Thursday, the UST traded at about 33 cents, still well below the intended value of $ 1.

Luna, another floating-priced Terra token that is meant to absorb UST price shocks, has lost 99% of its value and was last valued at only 1 cent.

Investors are scared of the implications for bitcoin. Luna Foundation Guard – a fund set up by creator Terra Do Kwon – has amassed a pile of billions of dollars of bitcoin to support the UST in times of crisis. The fear is that Luna Foundation Guard will sell much of its bitcoin holdings to support its troubled stablecoin coins. This is a risky bet – not least because bitcoin is itself an incredibly volatile asset.

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The aftermath of the collapse of the Earth has led to fears of market contagion. Tether, the world’s largest stablecoin, also fell below $ 1 on Thursday, falling to 95 cents at one point.

Economists have long feared that Tether may not have enough reserves to support the dollar in the event of mass withdrawals.

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