Cryptocurrencies nursed big losses on Friday when bitcoin was fixed below $ 30,000 and became a record series of losses as the collapse of TerraUSD, the stablecoin, swept the markets.

Crypto-assets have also been hit by extensive sales of risky investments due to fears about high inflation and rising interest rates. However, the mood is particularly fragile, as tokens, which should be pegged to the dollar, have faltered.

Bitcoin, the largest cryptocurrency by total market value, tried to bounce back at the start of the Asian session and rose 2% to $ 29,500, sort of recovering from a 16-month low of about $ 25,400 reached on Thursday.

It remains well below the level of a week ago about $ 40,000 and if there is no rebound in trade over the weekend, it will head to a record seventh loss in a row.

“I don’t think the worst is over,” said Scotty Siou, investment director of Axion Global Asset Management, a Hong Kong-based firm that manages crypto-index funds. “I think there will be even more downsides in the coming days. I think we need to see that open interest is much more collapsing, so speculators really aren’t out of it, and then I think the market is stabilizing. ”

This week, TerraUSD (USDT) broke the 1: 1 peg to the dollar as its mechanism for maintaining stability using another digital token failed under sales pressure. Last time it traded below 10c.

Tether, the largest stablecoin and one whose developers say it is backed by dollar assets, also came under pressure and fell to 95c on Thursday, according to CoinMarketCap.

Twice

Sales have roughly halved the global market value of cryptocurrencies since November, but the drawdown has turned into panic in recent sessions due to pressure on stablecoins. These are tokens pegged to the value of traditional assets, often the U.S. dollar, and are the primary means for moving money between cryptocurrencies or for converting balances into fiat cash.

“More than half of all bitcoins and ethers traded on exchanges are stablecoin, with USDT or Tether accounting for the largest share,” Morgan Stanley analysts said in a research note. For these types of stablecoins, the market must believe that the issuer has sufficient liquid assets that they will be able to sell during times of market stress. ”

Tether has recovered to dollar parity, and its operating company says it has the necessary assets in treasuries, cash, corporate bonds and other money market products. But it is likely to face additional challenges if traders continue to sell, and analysts are concerned that stress could shift to money markets if the pressure causes more and more elimination.

Ether, the second-largest cryptocurrency by market capitalization, held about $ 2,000 on Friday after falling to $ 1,700 on Thursday. Bitcoin and ether are about 60% below record highs reached in November.

Shares related to cryptocurrency also rose, and shares of broker Coinbase rose overnight, but still fell by just over a week.

In Asia, listed in Hong Kong Huobi Technology and BC Technology Group, which operate trading platforms and other cryptocurrencies, are seeing a weekly decline of more than 15%.

Amid the turmoil, Nomura on Friday said it had begun offering customers bitcoin derivatives, the traditional financial institution’s latest move into an asset class. – Tom Westbrook and Alan John, (c) 2022 Reuters

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