Bitcoin Falls. Cryptos Pressured As Stablecoin Terra’s Meltdown Intensifies

May 12, 2022

Bitcoin Falls. Cryptos Pressured As Stablecoin Terra’s Meltdown Intensifies

Bitcoin and other digital assets remained under pressure Wednesday as investors were worried about the collapse of the stablecoin TerraUSD, designed to be pegged to the US dollar.

Bitcoin has declined 2% in the last 24 hours to slightly around $31,000, after falling below $29,800 in the Tuesday session before rising. Bitcoin began a downward trend last Thursday, falling from $40,000 to $36,000. By Monday, it had reached new annual lows.

"Bitcoin's drop below $30,000 did not stay long, but the world's largest cryptocurrency is still in jeopardy," noted Edward Moya, an analyst at broker Oanda. "Too much institutional money will be on a tight leash with their Bitcoin transactions, and they will almost certainly not allow a slide below $30,000."

Other cryptos were also declining. Ether, the second-largest digital asset, fell 1% to around $2,350. The Ethereum blockchain network's underlying token is at its lowest level since July 2021, falling as low as $2,230 in late-day trade on Tuesday.

Smaller cryptos, or "altcoins," were even deeper into the red. Solana dropped 8%, while Cardano lost 6%. "Memecoins," so-called because they were originally meant as online jokes rather than serious blockchain projects, have also stagnated, with Dogecoin down 8% and Shiba Inu down 9%.

"Bitcoin will encounter short-term resistance near $32,500, followed by $35,000," Moya predicted. "On the downside, Bitcoin will attempt to maintain the $30,000 level, with $28,500 offering significant support."

There was a lot of attention paid to stablecoins, a type of cryptocurrency meant to maintain its peg to another asset, often the US dollar or another currency. The role of stablecoins in the cryptocurrency ecosystem is integral to ensuring stability within a volatile environment.

However, TerraUSD, which was once one of the top ten crypto assets, lost its peg to the dollar by a few cents on Saturday, and the situation has since worsened substantially due to severe selling pressure. Coin prices dropped as low as 24 cents on Wednesday.

Terra is a type of algorithmic stablecoin. Terra relies on financial engineering to maintain its peg while other stable tokens, such as USD Coin and Tether, rely on assets.

TerraUSD's weakness below the value of a dollar provides arbitrage opportunities for traders. By "burning" TerraUSD for Luna, they can profit from the token's drop in value when the price plummets below the dollar, or vice versa when the value of the TerraUSD rises.

Nevertheless, as millions of dollars of Terra were thrown away on Saturday, all of that collapsed. In the past 24 hours, Luna's price has fallen 84% to $5 after closing above $80 last week.

https://liquidity-provider.com/app/uploads/2022/05/unnamed-4.png

So far, none of the rescue measures, even mobilizing tens of thousands of Bitcoin worth billions of dollars to try to restore the peg and inject liquidity, has been successful. As a result, it is causing havoc on the cryptocurrency sector as a whole, including Bitcoin and Ether, which have been sold off because of Terra's chaos.

CEO of crypto derivatives company FRNT Financial Stephane Ouellette pointed out in a letter that the continued problems surrounding TerraUSD has created considerable fear within the industry.

According to Ouellette, Ethereum and Bitcoin are performing in line with previous drops. "Nevertheless, it is doubtful whether the currencies will hold their current levels in light of TerraUSD's emerging crisis, which lacks a clear resolution."

Subscribe Our Newsletter

Insider News: Citigroup Is in Talks to Buy Deutsche Bank Mexico for License
Insider News: Citigroup Is in Talks to Buy Deutsche Bank Mexico for License

According to people familiar with the matter, Citigroup Inc. is considering buying Deutsche Bank AG's Mexican bank in order to launch a new local entity as it exits retail operations in the country.

Companies
Bitcoin, Ether, And Dogecoin Prices Fall And Else Is Happening In Crypto
Bitcoin, Ether, And Dogecoin Prices Fall—And What Else Is Happening In Crypto

This week, though, might be promising for bitcoin and other cryptocurrencies. The annual bitcoin conference begins on Wednesday in Miami, and many expect the meeting to be a trigger for the largest cryptocurrency to test its 200-day moving average of over $48,000.

Crypto
B2BROKER Liquidity B2BROKER Liquidity
Sponsored
Alexander

What Is GameFi? — On the Intersection of Gaming and Finance
GameFi is a world where DeFi meets gamification, offering players true digital asset ownership and potential real-world earnings.

discover
Top 10 Richest People in 2024

Oto

Top 10 Richest People of The World: 2024 Edition

Read about the top 10 richest individuals of 2024 to see who drives world finance and the industries that contribute to their enormous wealth.

Investing
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Сonstantine

    Order Book Depth: What It Is And Why It Matters?

    Order Book Depth What It is And Why It Matters

    Alexander

    Spot vs Perpetual Futures: Which Is Right for You?

    Spot vs Perpetual Futures explained

    Hazem

    5 Reasons Traders Are Switching to Perpetual Futures

    5 Reasons to Switch to Perpetual Futures

    Constantine

    Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

    Top 3 Liquidity Challenges Facing New Exchanges Today

    Constantine

    Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

    Financial Planning in the Cryptocurrency Era

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained

    Constantine

    How to Start a Liquidity Provider Business?

    How to Start a Liquidity Provider Business

    Constantine

    How to Start a White Label Brokerage?

    How to start a white label brokerage

    Constantine

    How to Start a Multi-Asset Brokerage?

    How to Start a Multi-Asset Brokerage

    Hazem

    Crypto Ransomware – How They Happen and How to Avoid Them

    Crypto ransomware explained

    Constantine

    Best Web3 Browsers in 2025

    Best Web3 Browsers

    Constantine

    Best DAO Projects in 2025

    Best DAO projects in 2025

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.