Bitcoin hits more than two-year low as crypto meltdown continues

Cryptocurrencies fell again as the collapse of stablecoin TerraUSD sparked a flight from many popular digital tokens.

itcoin shed as much as 6.1 percent yesterday, falling below $27,000 to its lowest level since December 2020. Ether slipped to 12 percent, while tokens like Avalanche and Solana, which underpin some key decentralized finance protocols, also declined.

Virtual coins had previously posted double-digit percentage gains intraday, but the rally fizzled out. Stablecoin TerraUSD was still below its intended $1 peg, while related token Luna crashed.

The crypto sector is seeing heavy losses overall this week and sentiment remains fragile.

Stablecoins are key elements of the crypto market, where traders park funds while trading in and out of other tokens. The various stablecoins combined are worth well over $100 billion, and a growing loss of confidence could present an existential test for the digital asset ecosystem.

Algorithmic stablecoin TerraUSD — also known as UST — is up between 30 cents and 90 cents, trading at around 66 cents as of 6:18 am in London.

Backers of the coin are trying to raise about $1.5 billion to shore up the token after it crashed from its dollar peg, according to the founder of a firm approached about the deal.

“The demise of the stablecoin UST impacted the crypto market in a big way,” said Edul Patel, chief executive officer of Mudrex, an algorithm-based crypto investment platform. While Bitcoin has often recovered quickly from crashes in the past, it could fall further this time, he added.

“Will what’s happening with Terra spook the market? The answer is yes,” said Craig W. Johnson, chief market technician at Piper Sandler. “Money market funds matter to investors and we are now questioning the third largest money market fund in cryptoland. People didn’t think we were going to break the buck for that, and that’s clearly what happened.”

Crypto sentiment has also been hurt by elevated US inflation, suggesting aggressive rate hikes – an unfavorable environment for risky assets. “There is extreme fear across the crypto market,” said Marcus Sotiriou, an analyst at British digital asset broker GlobalBlock.

The $30,000 area has been a “particularly sensitive zone” for Bitcoin, wrote James Malcolm, head of forex and crypto research at UBS. This is where the mining economics turn negative, “which could potentially lead to increased coin sales from this key group,” he said.

Meanwhile, Coinbase Global stocks and bonds fell to fresh lows, signaling investor skepticism about the crypto exchange’s prospects in a bear market. The company reported lower-than-expected earnings yesterday and warned that trading volume and monthly user transactions are expected to be lower in the second quarter than in the first

https://www.independent.ie/business/world/bitcoin-hits-more-than-two-year-low-as-crypto-collapse-continues-41644691.html Bitcoin hits more than two-year low as crypto meltdown continues

Fry Electronics Team

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