Crypto meltdown deepens as stablecoin Tether drops below dollar peg

business-standard.com:

By Alun John, Elizabeth Howcroft and Samuel Indyk

HONG KONG / LONDON (Reuters) -The meltdown in TerraUSD, one of the world's largest stablecoins, sent shockwaves through cryptocurrency markets on Thursday, pushing another stablecoin Tether below its dollar peg and sending bitcoin to 16-month lows.

Cryptocurrencies have been swept up in a sell-off across higher risk assets, which has picked up steam this week as data showed U.S. inflation running hot, deepening investor fears about the economic impact of aggressive central bank tightening.

The sell-off has taken the combined market value of all cryptocurrencies to $1.12 trillion, around a third of where it was last November, based on data from CoinMarketCap, with more than 35% of that loss coming this week.

Bitcoin, the largest cryptocurrency by market cap, hit a low of $25,401.05 on Thursday, its lowest level since Dec. 28, 2020. In the past eight sessions, it has lost almost a third of its value, or around $13,000, and is down more than 45% so far this year.

Bitcoin is also down nearly two-thirds from a peak of $69,000 in November 2021.

Bitcoin's correlation with the Nasdaq composite has been on the rise recently and is now up near its all time highest level, based on Refinitiv data. The Nasdaq composite has tumbled around 8% so far this month.

Ether, the world's second-largest cryptocurrency, fell nearly 15% on Thursday to $1,700, its lowest since June 2021.

Unlike previous financial market sell-offs, when cryptocurrencies have been largely untouched, the selling pressure in these assets this time round has undermined the broader argument that they are dependable stores of value amid market volatility.

NOT-SO-STABLECOINS

Stablecoin TerraUSD has been hit by the turmoil and