Bitcoin has fallen below the 30,000 mark as investors flee the cryptocurrency.
Jaap Arriens | Nurfoto | Getty Images
Bitcoin fell below $ 27,000 on Thursday for more than 16 months as cryptocurrency markets expanded losses amid rising inflation and fears of the collapse of a controversial stabilization project.
Bitcoin fell as low as $ 26,595.52 on Thursday morning, according to Bitstamp. This is the first time since December 30, 2020 that Bitcoin has fallen below $ 27,000.
As of 1:30 am ET, Bitcoin was trading at 27,061, down 15% in the last 24 hours.
Ether, the second-largest digital currency, has fallen as low as $ 1,789 per coin. This is the first token since July 2021 to drop below the 2,000 mark.
Ether was down 23% at its latest price of 8 1,852.
Investors are fleeing the cryptocurrency at a time when stock markets have fallen from the heights of the coronavirus epidemic in fear of rising prices and a deteriorating economic outlook. US inflation data released on Wednesday showed that prices for goods and services rose 8.3% in April, exceeding analysts’ expectations and approaching a 40-year high.
Also falling on the minds of traders is the fall of the disrupted Stablecoin protocol Terra.
The TERUSD, or UST, is supposed to reflect the value of the dollar, but on Wednesday it fell below 30 cents, shaking investor confidence in the so-called decentralized economy.
Stablecoins are like bank accounts in a barely controlled crypto world. Digital currency investors often turn to them for security during market turmoil.
But the UST, an “algorithmic” stabilized coin that is underpinned by code instead of cash in reserves, has struggled to maintain a stable value as holders bolted out massively.
As of Thursday morning, the USD was trading at around 62 cents, still well below its $ 1 peg target.
Luna, another terra token that has a floating price and to absorb the UST price push, wipes out 97% of its value in 24 hours and the final price is only 30 cents – even less than UST.
Investors fear the impact of Bitcoin. The Luna Foundation Guard – a fund founded by Terra creator Do Cowan – raised billions of dollars in bitcoin to help the UST in times of crisis.
The fear is that the Luna Foundation Guard will sell a large portion of its bitcoin holdings to shore up its ailing stablecoin. This is a risky gamble, not least because Bitcoin itself is an incredibly volatile asset.
The fall in the price of the world’s largest stablecoin teaser added to investors’ fears on Thursday. At one point the token dropped below 99 cents. Economists have long feared that Tether may not have the reserves he needs to keep his dollar pegs afloat.