Cryptocurrencies fell again with traders beginning to get nervous about the value of stable coins linked to the US dollar. Bitcoin, the largest tok
Cryptocurrencies fell again with traders beginning to get nervous about the value of stable coins linked to the US dollar.
Bitcoin, the largest token by market cap, fell for the sixth consecutive day, losing 2.50% to US$31,430.
Ethereum lost 1.98%, also falling for the sixth consecutive day, with the coin changing hands at US$2,366.
According to Naeem Aslam, a market analyst at Avatrade, Bitcoin’s recent price battering is “mainly due to the fact that crypto traders are nervous about Terra’s US Terra (UST) peg with the dollar”.
When a coin is pegged to a currency, such as UST to the US dollar, it usually gives it a level of stability by regulating the supply.
However, the UST sank below US$0.70, when it should be as close to US$1 as possible.
Aslam argues that Terra, which has been buying Bitcoin over the last few months “could have sold a large amount of Bitcoin to save the UST dollar peg”.
“This isn’t the first time that we are seeing stable coins lose their value against the dollar as a peg, so all in all, if Terra can show that it can contain the recent setback, it would only strengthen the stable coin’s market place.”
With regards to Bitcoin, traders should keep a close eye on US$30,000, as “any violation of this price level could trigger a further sell-off”, the analyst said.
In some of the altcoins, Solana fell 10% to US$65.33, Dogecoin lost 7.36% to US$0.1071 and Avalanche lost 17.51% to US$40.23.
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