Crypto Market Gets Crushed With Tether (USDT) Giving Up Dollar Parity

Key Insights:

• Bitcoin (BTC) is the best of the worst today, falling by 10% to sub-$28,000 levels.
• The rest of the crypto top ten are down by more than 20% over the last 24-hours.
• Market angst over stablecoin pegs to the dollar weighed, with Tether (USDT) the latest to lose its peg.

There is no respite for the crypto market as stablecoin woes continue to hit investor sentiment. On the news front, there was little to provide investors with a shift in focus, with the crypto top ten hitting new 2022 lows. Tether (USDT) becomes the latest stablecoin to give up its peg against the dollar.

The crypto market has been so seismic that stablecoins are now a feature of the crypto top ten by market cap.

Bitcoin (BTC) is down 10% to $27,731, at the time of writing. Bitcoin last sat at sub-$28,000 in December 2020.

Stablecoins send the crypto market into a tailspin

This week, the TerraUSD (UST) peg with the US dollar imploded, with UST touching a Wednesday all-time low of $0.1977 before a partial recovery.

The knock-on effects of the de-peg are far-reaching, with Terra LUNA tumbling to a Wednesday low of $0.58. It is possibly the first time a top-ten crypto faces the prospect of “almost zero.”

Crypto market conditions have not improved this morning, with stablecoins still the area of market attention.

Today, USDT grabbed the headlines. Tether gave up parity with the dollar, falling to $0.986 levels.

In the wake of UST’s visit to sub-$0.20, market fear of a Tether plummet has investors scrambling.

Over the last 24 hours, the total crypto market cap fell by $268 billion to $1,116 billion before support kicked in.

With stablecoins drawing market attention, the de-pegging of TerraUSD has also drawn the attention of lawmakers.

The threat of a regulatory overhaul has added to the market angst.

Crypto top-ten are among the biggest losers over 24 hours

While bitcoin is down by 10% over 24 hours, losses are far more significant elsewhere.

Solana (SOL) and Cardano (ADA) are down 31% and 27%, respectively, at the time of writing.

Dogecoin (DOGE) and XRP were not far behind, with losses of 26% and 26%, respectively.

Ethereum (ETH) and Binance Coin (BNB) saw relatively modest losses. At the time of writing, ether was down 19%, with Binance Coin also down 19%.

For those hopeful of a Terra LUNA revival, LUNA was down 97.1% over 24 hours. Once sitting in the top ten by market cap, LUNA ranked at #79 this morning, with a market cap of $556 million.

For the remainder of today, there remains very little for investors to consider. A re-pegging of the market’s major stablecoins will be a must to restore confidence.

This isn’t the first time stablecoins have lost their pegs against the dollar. UST’s demise and the issues behind restoring the peg remain a concern.

The fact that Tether has given up parity this morning adds fuel to the fire. On Wednesday, the markets were considering the end of algo stablecoins. A Tether collapse would have altogether different connotations for crypto market stability.