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Black Wednesday of cryptocurrencies

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After 5 months of very high volatility on the entire digital money sector, the last three sessions have been devastating for all the cryptocurrencies of reference.

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There is great confusion on the cryptocurrency market.

After 5 months of very high volatility on the entire digital money sector the last three sessions have been devastating for all the cryptocurrencies of referencestarting with the TerraUsd stablecoin and the capitalization leader, bitcoin.

Today’s session was a real “black Wednesday”: bitcoin fell below $ 30,000, hitting its lowest level since June 2021, while stablecoin TerraUsd it continued its steep fall as early as Monday (today it is quoted less than 30 cents, 70% less than last week).

terrausd backers seek 15 billion to prop up stablecoin bloomberg

As for the market value of the bitcointhe largest cryptocurrency in existence, it fell 6% today to a value of $ 29,085, the lowest level in 11 months. Analysts had set the technical support threshold for bitcoin at $ 30,000, which now moves around $ 21-22,000. Much will depend on market confidence in a fund that is highly exposed to risk from rising interest rates.

bitcoin btc breaks below 30000 after hotter than expected cpi data bloomberg

The long wheelbase ofinflationthe prospect of new monetary tightening by the Fed and the ECB and the geopolitical uncertainty about the crisis in Ukraine have in fact shifted the invested capital towards low-risk destinations: a problem that has been seen on Wall Street with the collapse of technological stocks.

Bitcoin and cryptocurrencies have become a risk-on \ risk-off bet this year and inflation data indicates that the best current positioning is prudence” – explains Matt Maley chief market strategy of Miller Tabak. – “As for TerraUsd, the situation is different, but the collapse of the stablecoin still acts as a catalyst for investors’ distrust of the entire cryptocurrency sector“.

The collapse of TerraUsd created quite a stir why It is the first time that the stablecoin, the most important cryptocurrency anchored to the dollar (and guaranteed by bitcoin and the Moon), has fallen below the parity level (1 dollar = 1 TerraUsd). During the session on Wednesday, TerraUsd fell below parity again, quoting below the 50 cent level in London, thus burning billions of dollars in value. Luna, which is a cryptocurrency part of TerraUsd’s dollar parity mechanism, has fallen 83% in the past 24 hours, slipping to a capitalization of around 7.7 billion dollars, up from 18.4 billion in value before it started. The breakdown.

From founder Do Kwon no news on the reasons for the vertical fall or on the “recovery plan” of the stablecoin. According to some sources, the committee of the guarantors of TerraUsd and Luna are trying to raise at least 1.5 billion dollars to strengthen the capitalization of the stablecoin itself, trying to catch up with the dollar. The operation, again according to rumors, plans to offer investors the purchase of the Luna coin with a 50% discount on the spot price: the proceeds, added to the proceeds generated by the liquidation of the Bitcoins pledged to guarantee TerraUsd, should allow the rescue. But the winds are against for now. The collapse of the Moon effectively prevents the attractiveness of buying cryptocurrency even at half price, while the liquidation of bitcoins also accelerates the fall of the cryptocurrency-guarantor.

The uncertainty about the cryptocurrency market has also reached Washington, where the Secretary of the Treasury, Janet Yellen, in a testimony to Congress, warned the legislator on the urgency of a more adequate and organic regulatory framework for stablecoins and more generally for cryptocurrencies. “The collapse of the EarthUsd – Yellen said – it is a warning and a confirmation: the market needs new supervisory rules to ensure greater security for investors“.

Both the Fed and all the big banks in the world are trying to bring control and regulatory order under control the complex, opaque and intricate world of digital currencies in all their forms. Not only due to the size of the market, but also in view of the worldwide introduction of the new generation of cryptocurrencies issued directly by the issuers, according to a study by the Bank for International Settlements of Basel, around 80% of central banks of the world, are engaged on national digital cryptocurrency projects, basically, the digital version of their own national currency. The bank of the People’s Republic of China has already done so while in the Western world, the first to cross the finish line could be the ECB, which has been implementing the new digital dolar for years.