The sell-off wiped over US$200 billion off the cryptocurrency market in just 24 hours, Bloomberg reports, citing estimates from price-tracking website CoinMarketCap.
The rout put the combined market value of all cryptocurrencies at US$1.12 trillion, about a third of where it was last November, Reuters reports, citing data from CoinMarketCap, with more than 35 per cent of that loss coming this week.Article contentPanic spread from a meltdown this week in stablecoin TerraUSD, known as “UST”, when it slipped below its 1:1 peg to the dollar.
Stablecoins are digital tokens pegged to the value of traditional assets, like the U.S. dollar, and are favoured in crypto markets in times of turmoil.Article content Tether, a major stablecoin, slipped below its dollar peg, hitting as low as 98 cents early Thursday, according to CoinGecko. USD Coin was trading at around US$1.04 while Binance USD was at US$1.07 – a significant breakout of its usual range, said Reuters.
“Contagion here is not via linkages between the crypto ecosystem and the traditional financial system, but via retail investors sentiment,” Nikolaos Panigirtzoglou, global market strategist at JPMorgan Chase & Co, told Bloomberg. “If the $1 trillion capital loss in crypto markets causes broad-based retrenchment by retail investors in other risk assets such as equities, then that is where the spillover is.