Bitcoin trades below $30K as markets enter TerraUSD plunge

Bloomberg – Bitcoin recovers slightly and trades below $30,000to prolong the period of relative calm in the market after the collapse of one of the most closely watched stablecoins, which affected the digital assets over the past week.

The largest cryptocurrency is up 1.1% at $29,670 as of 10:40 am in London. Ether, the second largest token, is up 1.9%, While coins such as Avalanche and Cardano recorded higher gains.

On Thursday, Bitcoin plunged as low as $25,425 after the collapse of the TerraUSD algorithm, This puts the ecosystem that sustains it at risk. At its height, the market panic engulfed the $76 billion stablecoin Tether, a major crypto asset that briefly got rid of its dollar peg.

“We witnessed the rapid decline of a major project that shook the entire industry, But also new resistance in the market that was not present during the recent market crash,” Changpeng Zhao, CEO of crypto exchange Binance Holdings Ltd, tweeted on Sunday.

Even after recovering Sunday, The total cryptocurrency market cap fell by nearly $350 billion in the last week, to roughly $1.35 trillion, according to data from CoinGecko. Bitcoin is down nearly 60% from its all-time high in November.

Although the crypto markets may have absorbed the worst of the TerraUSD crash, the asset class faces other challenges, Especially the rise in global interest rates and the tightening of liquidity conditions. Federal Reserve Chairman Jerome Powell confirmed this week that the central bank will likely raise interest rates by half a point at its next two meetings.

“I remain optimistic about the long-term, especially in terms of Bitcoin,” said Vasja Zhuban, head of the crypto exchange matrix. “But I am expecting high volatility for some time, followed by a period of much lower volumes and lower prices before we anticipate a trend to new all-time highs.”