Later in the day it rallied somewhat to top $19,000 but fell again early on Sunday to around $18,200 according to website CryptoCompare.
USDD, the algorithmic stablecoin of smart contract platform Tron and the ninth-largest stablecoin by market cap, lost its peg to the dollar on Monday, at one point dropping as low as $0.96 as short-sellers built up extreme positions against the cryptocurrency, according to researcher CryptoCompare
Bitcoin has lost 30% of its value in just four days, exhibiting a level of volatility that the largest cryptocurrency is famous for—even if it hasn’t seen such wild swings in years.
Other cryptocurrencies were also in the gutter: the MVIS CryptoCompare Digital Assets 100 Index, which measures 100 of the top tokens, dropped as much as 17%, also its lowest point since December 2020.
Tether’s market value has fallen by 9 per cent since May 12 to $76bn as tokens have been removed from circulation to meet redemption requests, CryptoCompare data show.
By the end of Thursday, the market capitalisation of the project had fallen from $41bn to $6.6m, “the largest destruction of wealth … in a single project in crypto’s history,” according to Charles Hayter of the analytics firm CryptoCompare.
The cryptocurrency market lost $400 billion during the week as two stablecoins lost their pegs to the US dollar. A chart shows a slide in luna coin's price while supply soared in May 2022 via CryptoCompare.
The failure of a once-hyped stablecoin has sparked serious questions over the functioning of the entire crypto market. Research firm CryptoCompare said luna was “the largest destruction of wealth in this amount of time in a single project in crypto’s history”.
The US$1.3 trillion cryptocurrency industry was hit on Thursday by one of its toughest challenges when stablecoin Tether — a critical cog in the market — failed to maintain its link with the US dollar.
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“This assumes normal market conditions,” said David Moreno Darocas, a research analyst at CryptoCompare. “During periods of high volatility and one-sided buy/sell activity for UST, the above stabilizer may not be sufficient to maintain the peg in the short-term.”
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