Why It Matters: Bitcoin fell as low as $26,350.49, while ETH touched $1,748.30 in intraday trading on Thursday amid a marketwide crash.
More than $200 billion was wiped off the cryptocurrency market in a single day as investors fretted about the fallout from Terra USD (UST) losing its peg to the dollar and its consequences on Bitcoin’s price.
The panic only worsened as Tether (USDT) — the largest stablecoin by market capitalization — started to lose its peg to the dollar as investors began to redeem the coin for dollars.
At press time, USDT traded at $0.9974, touching an intraday low of $0.9485.
GlobalBlock analyst Marcus Sotiriou said in a note that a Tether collapse would be catastrophic due to its dominant market cap.
“Although USDT becoming de-pegged persistently is a risk worth noting, I am confident that the USDT peg will be restored as I think Tether have sufficient backing in their reserves, and its mechanics are safer than the UST stablecoin,” said Sotiriou.
Key whale addresses dumped a total of $710 million in USDT on Thursday — the single largest one-day dump from 100,000 to 10 million USDT addresses in Tether’s history, according to Santiment.
OANDA senior market analyst Edward Moya said “we are getting close to the end of the market sell-off,” but added that the Bitcoin rebound “won’t last if risk appetite does not stabilize soon.”
“Bitcoin is still vulnerable to one last plunge that could coincide with a stock market selloff before many crypto investors feel the bottom is in place,” wrote Moya in an emailed note.
Equities were higher at press time, with S&P and Nasdaq futures up 0.6% and 0.9%, respectively. The yield on the 10-year benchmark notes fell 7.1 basis points to 2.843 as fears of recession jittered investors, according to a report from Reuters.
The dollar index, a measure of the greenback’s strength against six other currencies, rose to 104.22 — the highest level since December 2002, according to another Reuters report.
Cryptocurrency trader Justin Bennett tweeted that there’s a good chance that Bitcoin could see a relief rally that would run “beyond most expectations.”
There’s a good chance #crypto has reached a local bottom if $BTC can reclaim $28,800 today.
Like the selloff, the relief rally will likely run beyond most expectations.