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Stablecoin fell as low as 62 cents from its intended $1 peg
Cryptocurrencies have shed nearly $800 billion in market value over the past month and touched a low of $1.38 trillion on Tuesday, as the end of easy monetary policy is weakening the appetite for risk assets.
Bitcoin, which makes up almost 40% of the digital currency market, hit a 10-month low earlier on Tuesday before rebounding to $31,450, just six days after touching $40,000.
It was more than 56% below its November 10 all-time high of $69,000.
The downward trend was triggered by the broader sell-off in the US markets after the Federal Reserve tightened the monetary policy on Friday.
Digital assets plummeted, mirroring a plunge in equities on fears of hawkish interest rate hikes worldwide to stave off decades-high inflation.
The total crypto market value hit $2.2 trillion on April 2, well off of its all-time peak of $2.9 trillion in early November.
“Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may, unfortunately, be a rocky one, at least for the time being,” blockchain data provider Glassnode said in a note.
Signs of weakness in stablecoins, which are generally considered safer cryptocurrencies as these are pegged to fiat currency, further spooked investors.
TerraUSD, or UST, the world’s fourth-largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.
The token sank below 70 cents for the first time late Monday and fell as low as 62 cents before regaining ground to trade at 90 cents Tuesday.
Picture Credit: The Guardian
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