The collapse of one of the biggest cryptocurrencies and the massive drop in the price of dozens of such currencies has shaken the confidence of the people in the crypto market. On the other hand, regulatory government agencies around the world have had a chance to claim that their warnings were proven true. These agencies had warned several times that investing money in cryptocurrencies is risky.
The biggest setback has come to cryptocurrencies called stable coins. These are the currencies that were said to be pegged to the dollar. As such, they were described as a bridge between the traditional financial system and the crypto trading ecosystem.
TeraUSD (also known as UST) has been in these currencies. It was claimed that one UST cost is equal to one US dollar. At one point the market value of this currency reached $19 billion. But its dollar parity broke down a week ago. Since then its price has fallen so fast that it was worth 16 cents last Friday.
Following this development, traders' confidence in the largest cryptocurrency, bitcoin to smaller currencies, has fallen sharply. The most popular stable coin has been the Tether, which was estimated to have a market value of $80 billion. But on Thursday, its price parity with the dollar also broke. Whereas Tether claimed to have assets in hard currency. Therefore its price is not dependent on complex trading algorithms.
Genki Oda, CEO of RemixPoint, a crypto trading company in Japan, told the website Nikkeasia.com – “Algorithmic stable coins have their limits. In the future, only one stable coin will be left with enough assets.
Jun Yokoyama, a researcher at the Daiwa Institute of Research in Japan, said that according to the global trend, the Japanese government will also take appropriate steps in this matter. Significantly, US Treasury Secretary Janet Yellen has called for legislation to regulate crypto trading.
According to Coin Market Cap, the organization that oversees crypto trading, the total market value of cryptocurrencies as of last Friday was $1.3 trillion. That was $280 billion less than a week ago. By the way, even after the value of UST reached the bottom, the total value of the stable coins as of last week was equal to $ 150 billion.
Experts have said that the sudden sharp fall in the price of cryptocurrencies has exposed the weakness of cryptocurrencies. An employee associated with the company of crypto business in Japan said – this time the effect has been more serious because the entire crypto ecosystem has collapsed.
UST was started in 2018 in South Korea. He aimed to bring stability to the sector by linking the price of crypto with the dollar. But now due to this currency, the crypto business has suffered the biggest setback so far.
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