Bulls Sell Slow Crash When will the crypto market stop falling and reach a new balance?

Bitcoin extended losses, falling below $30,000 for the first time since July 2021, falling more than 55% from its record high in November amid a global flight from risky investments. At the same time, the entire line of the encrypted market fell. According to data from CoinGecko, the current market value of cryptocurrencies is $1.498 trillion, with a 24-hour decline of 9.2%.

Crypto markets and related products fall across the board

Most notably, UST was severely de-anchored in the context of a sharp drop in the crypto market. According to the market, UST has fallen to $0.62 and has been seriously de-anchored. LUNA fell to $27, a 24-hour drop of more than 60%.

Do Kwon, founder of Terraform Labs, which powers the Terra blockchain, is taking steps to shore up its algorithmic stablecoin. It is reported that Kwon caught the attention of the crypto world earlier this year by promising to buy up to $10 billion in Bitcoin to support Terra.

Luna Foundation Guard, an association created to support decentralized tokens and the Terra blockchain, said it will release about $1.5 billion worth of bitcoin after TerraUSD falls below $1 as the cryptocurrency market continues to tumble Coin and TerraUSD loans to help strengthen the peg to TerraUSD. 

In fact, as early as Monday, the Federal Reserve released the latest “Financial Stability Report” and emphasized the risk of running on stablecoins. Some types of money market funds (MMFs) and stablecoins remain prone to runs, and domestic banks have lower capital risks, but some money market funds, bond funds and stablecoins still have structural vulnerabilities, the report wrote. Back in January, Federal Reserve researchers published a study on the risks and benefits of stablecoins that said the Financial Stability Oversight Board could step in to oversee stablecoins if Congress does not enact new laws targeting the industry. As previously reported, the algorithmic stablecoin UST de-pegged from the U.S. dollar twice in just three days.

In terms of the DeFi market, according to the data of the masters on the Ouke cloud chain, in the past 24 hours, the total amount of DeFi mortgage loan and settlement of the entire network reached 70 million US dollars, hitting a new high in the past 90 days. Among them, the top three projects by liquidation amount are Venus ($27.79 million), Aave ($25.18 million) and Compound ($11.8 million).

At the same time, the correlation between the crypto market and U.S. stocks is also strengthening. On May 10, the three major U.S. stock indexes closed sharply lower, with the Dow down 1.99%, the Nasdaq down 4.29%, and the S&P 500 down 3.2%.

In addition, the stock prices of listed companies related to encryption have also been hit . Due to the decline in Bitcoin prices, it once fell below the cost price of MicroStrategy ($30,700/piece) to $29,730. MicroStrategy stock closed at $219.05 in the early hours of this morning, 24 hours Down 25.55%.

Along with the fall in crypto markets, U.S. Treasury Secretary Yellen pointed out that the U.S. Financial Stability Oversight Council (FSOC) is working to determine the risks of digital assets. The U.S. Financial Stability Oversight Council (FSOC) recommends that regulators increase their capacity and efforts to address climate-related risks to the financial system.

When is the equilibrium under the slow collapse?

Cryptocurrencies have slumped as monetary policy tightening to combat runaway inflation has dampened liquidity and kept investors away from speculative assets in global markets. 

“We’re seeing a slow crash partly because it’s mostly long selling rather than leveraged liquidation,” said Josh Lim, head of derivatives at New York brokerage Genesis Global Trading . Hovering around its cost base, the market is waiting to see if shareholders will enforce risk reduction.”

The CTO of Qt, a popular programming framework used by tech giants like Adobe, Tesla and Blizzard, called the cryptocurrency a “Ponzi scheme” on May 6 . Although its CTO believes that cryptocurrencies and “smart contracts are just a bad idea,” it repeatedly uses the fact that Satoshi Nakamoto used Qt in early Bitcoin wallets. Given that cryptocurrencies are “Ponzi schemes,” it’s safe to assume that public companies’ associations with household-name “Ponzi schemes” need to be disclosed as risks in their annual reports. However, the company did not mention blockchain or cryptocurrencies in its risk disclosure. Knoll, the CTO of a technology used in thousands of applications around the world, has a very bad view on encryption .

Billionaire cryptocurrency investor Michael Novogratz, who leads Galaxy Digital Holdings Ltd., warned that he expects things to get worse before they get better. “Cryptocurrency trading may be correlated with the Nasdaq until we reach a new equilibrium,” Novogratz said on Galaxy’s first-quarter earnings call on Monday. “My gut feeling is that there’s more losses to come. Do, at least for the next couple of quarters, that’s going to trade in a very volatile, volatile and difficult market before people feel like we’re in equilibrium.”

Michael Novogratz also pointed out that there will be more losses in the crypto market and that the recovery will not happen in the next two months. Cryptocurrencies will remain highly correlated with the Nasdaq, and once the stock market finds “some kind of bottom,” Bitcoin will rally.

However, in response to the current situation, the market is also concerned that the 40-day correlation between the crypto market and the S&P 500 stock benchmark is near record levels , and any further blow to stock market sentiment could drag Bitcoin down. 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bulls-sell-slow-crash-when-will-the-crypto-market-stop-falling-and-reach-a-new-balance/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2022-05-09 23:26
Next 2022-05-09 23:28

Related articles