The second stablecoin fluctuated, further weakening the cryptocurrency markets

The second stablecoin fluctuated, further weakening the cryptocurrency markets

Like The price of Bitcoin and other cryptocurrencies has dropped dramatically In recent days, a centralized type of token has been used by traders – called a stablecoin It is also starting to lose value, which has raised widespread questions about the viability of cryptocurrency as an asset class. Days after one of the largest stablecoins, terraUSD, started declining in value, a second stablecoin showed a similar sign of weakness.

Tether, the world’s largest stablecoin, had a market capitalization of more than $82 billion on Sunday. Since then, the value of one rope has fallen from its benchmark of $1 to 95 cents at 12:24 AM PT Thursday. This follows the path of Tera, which “lost its peg” to the US dollar on Monday and has since given up most of its value.

As the name implies, stablecoins are cryptocurrency tokens that are backed by an asset – often, but not always, US dollars – and designed to hold a stable and consistent value. Many cryptocurrency traders prefer using stablecoins, rather than trading tokens directly or using US dollars, as transactions usually have lower fees and can be processed more quickly.

The word Stablecoin has been used “in the broader blockchain ecosystem to define a lot of different token structures, and the truth is that not all of them are stable the way we’ve defined them,” Denelle Dixon, CEO of Stellar Development Corporation, said in an email statement. The foundation is a non-profit organization focused on payments, and it supports a number of stablecoins. Dixon previously served as Chief Operating Officer of Mozilla.

The declines in the prices of both terraUSD and Tether come amid dramatic declines in the broader cryptocurrency market. Bitcoin and Ether, the two largest cryptocurrencies by market cap, are trading more than 20% lower than they were seven days ago. Cryptocurrency market More than 200 billion dollars have been disposed of in the past 24 hoursAccording to

“Right now in cryptocurrencies, we are seeing a correction in the market in response to higher interest rates, the abandonment of systemic risks across financial markets and concerns about a rapid rise in inflation,” said Steve Ehrlich, CEO of crypto company Voyager Digital. In an email statement.

As of 3pm PST Thursday, bitcoin is trading at $28,399 and ether at $1,906. Concerns about inflation and rising interest rates may contribute to the bearish economic outlook for investments outside the cryptocurrency markets as well.

TerraUSD was down 36 cents by Thursday at 9:35 AM PT, following the official Terra Twitter account Publish a statement He said the terra blockchain has been officially discontinued “to prevent governance attacks after a sharp inflation of LUNA in US dollars and a significant drop in the cost of the attack.”

Since then, Tera’s official Twitter account He said that its blockchain network has undergone a patching process and it has now undergone”resumed block production.

Although tether has not yet seen the degree of damage to terraUSD, it is a much more important stablecoin. A slight change in its price could have a far-reaching resonance throughout the cryptocurrency ecosystem.

Tether has become an integral part of global cryptocurrency trading, and the mechanism of choice for more than half of all bitcoin traded worldwide as of September 2021, according to CryptoCompare, the global crypto market data provider.

Tether has been embroiled in controversy for years. In 2021, its parent company (also called Tether) and its cryptocurrency exchange, Bitfinex, were required to pay a fine of $18.5 million and stop trading activities in New York State. The companies were fined over a case that involved covering up the $850 million lost.

“Bitfinex and Tether recklessly and illegally covered up massive financial losses to keep their plan going and protect their bottom line,” New York Attorney General Letitia James said at the time of the ruling.

Terraform Labs (the company behind terraUSD) and Tether did not respond to a request for comment.

2022-05-12 23:32:56

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