This week’s crypto panic has tied to the stock market’s decline, which has sent investors fleeing to safer investments. However, cryptocurrency market prices are highly volatile and this recent selloff is only the fourth largest in Bitcoin’s 13-year history. Bitcoin’s plunge started with the collapse of so-called “stablecoin” TerraUSD. Investors are increasingly avoiding these types of digital assets, especially those that are not backed by any central bank.
Bitcoin fell below the cardinal level of $20,000 connected
During a crypto panic last year, Bitcoin prices fell below the cardinal level of $20,000 and more than half of bitcoin wallets were sitting on profits. According to a recent study by Columbia Business School, 61% of bitcoin addresses had not sold anything in the past year. The study also showed that financial firms borrowed heavily to bet on bitcoin’s rising value. Now, if bitcoin falls below that level, these firms will have to liquidate their positions.
The sell-off in the cryptocurrency market has intensified further on Wednesday. Bitcoin fell below the cardinal level of $20,000 for the first time since late 2020, when it peaked at nearly $69,000. It has since lost more than 70% of its value since then. Crypto markets are slammed on the heels of rising inflation and central bank rate hikes, which have dampened investor appetite for riskier assets. This has had a negative impact on the high-flying tech sector and has lowered bitcoin’s value.
Despite the risky nature of the cryptocurrency industry, price fluctuations are part of the game. Individual investors should not sell their cryptocurrencies too quickly. During the recent dip, bitcoin fell below its cardinal level of $20,000 connected in a crypto panic
Stablecoins are a store of value in times of market volatility
Unlike cryptocurrencies, stablecoins cannot go up and down in price. They have pegged to a fiat currency, usually the U.S. dollar, to ensure that they will always be worth one U.S. dollar. As long as the asset backing the stablecoin is intact, the price of its token will remain stable. If it were not for this tether, it would have fallen by more than $200 million in one year.
Stablecoins have a relatively low price fluctuation compared to cryptocurrencies like Bitcoin and Ethereum. Unlike cryptocurrencies, these coins are a great option for passive income since they are less volatile than the corresponding cryptocurrencies. The ability to use stablecoins alongside blockchain technology helps speed up the speed of peer-to-peer transactions. CoinSwitch is a website that offers several stablecoins, including Bitcoin and Ethereum. Its platform has easy to use, and its stablecoins are easily exchanged between users.
As a store of value in times of market turmoil, stablecoins offer investors peace of mind. While volatility in the crypto market is inevitable, investors can rest easy knowing that their money is safe with stablecoins. These coins have backed by a traditional currency or a commodity such as gold. They can be used for lending and borrowing, as well as to send payments overseas. They are so popular that they are the bedrock of the crypto ecosystem, with a market cap of more than $180 billion.
TerraUSD collapse raises urgent questions about crypto developers’ ambitions
The recent collapse of the TerraUSD cryptocurrency, a stablecoin based on financial engineering, raises questions about the crypto developers’ ambitions. The coin had enjoyed a meteoric rise over the past year and was valued at over $18 billion at its peak. However, its collapse has left investors scratching their heads and wondering if it was a scam or a viable investment.
The crash of the Terra coin is a warning to the crypto industry: the value of cryptocurrency does not derive from any central, easily manipulated controlling authority but rather from the sleek, well-designed code and network effects. In fact, some crypto enthusiasts have argued that the crash of the Terra cryptocurrency is a stress test for the crypto industry and Bitcoin has continued to rise despite the massive sell-off.
In the last month, the price of a single TerraUSD has plummeted from its $1 peg to pennies. Investors remained stubborn and used the stablecoins to hide $ 180 billion by May 2022. In the meantime, traders and investors can buy ether with the TerraUSD and other cryptocurrencies. The price of the ether and bitcoin can be converted to TerraUSD and used to purchase other cryptocurrencies. Share your thoughts with the help of write for us