Major cryptocurrencies faced new pressure on Thursday as the industry grapples with new challenges on multiple fronts.
Bitcoin (BTC-USD), the largest digital coin, fell 4% to its lowest level in three months. Other major cryptocurrencies also fell, with Ethereum (ETH-USD) and BNB (BNB-USD) down more than 5%, and a stablecoin called Tether below the key price of $1.
These declines have brought the total market value of all crypto assets to its lowest level since the banking industry turmoil began in March, according to CoinMarketCap.
Listed cryptocurrency companies also fell, including the stock price of Coinbase Global (COIN). Other crypto stocks sold off as well, including MicroStrategy (MSTR), Riot Platforms (RIOT), and Marathon Digital (MARA).
The new price pressure comes on top of the Federal Reserve's assurance that interest rate hikes will not end this year, as well as cryptocurrency lending platforms Delio and Hull suspending withdrawals due to increased customer requests. This is in response to the report.
Regulators also doubled down on the industry with two new lawsuits filed last week by the Securities and Exchange Commission against crypto exchanges Coinbase and Binance. It argues that 19 specific virtual currencies are securities and therefore should be registered with the SEC.
These tokens, including BNB, SOL, ADA, and MATIC, have fallen 10-14% since the lawsuit.
“Cryptocurrencies may struggle here until the regulatory environment improves,” Oanda market analyst Edward Moya said on Thursday.
“The market is sharp”
Multiple pressure points have left the industry with another problem: plenty of sellers but not enough buyers. Large trading companies that may once have played the role of market makers have scaled back their activities over the past year.
Last week, the trading volume of Coinbase and Binance decreased. Binance's US-related platform, Binance.US, also has low liquidity. According to Kaiko Research, the amount of money available for trading on Binance's US-affiliated platforms has fallen by 75% following last week's SEC charges.
“Everything is coming together at once and there is very little liquidity in the market right now,” crypto investor and entrepreneur Thomas Dunleavy told Yahoo Finance.
Another sign of increased stress is a tether (USDT), the largest dollar-pegged stablecoin in the market by market capitalization and trading volume.
It fell as much as 0.20% from Wednesday to Thursday, the biggest single-day drop since November.
As of 2 a.m. New York time Thursday, the $83 billion stablecoin, which is not supposed to fluctuate below the key price of $1, had fallen to $0.9958. It is published by a company called Tether.
“Markets are sensitive these days, so it's easy for attackers to take advantage of this general sentiment,” Tether Chief Technology Officer Paolo Ardoino said on Twitter early Thursday.
Markets are sensitive these days, so it's easy for attackers to take advantage of this general sentiment.
But with Tether we are ready as always. Let them come.
We will exchange it for any amount.— Paolo Ardoino 🍐 (@paoloardoino) June 15, 2023
Tether tokens are collateralized by other assets held by the company in reserves, with 85% cash and cash equivalents such as U.S. Treasuries and 6.5% collateralized, according to a March 31 reserve report. Loans and 4% are precious metals.
If the stablecoin falls below its $1 peg, “verified” market participants can profit by buying the token and exchanging it for other currencies.
However, during periods of surging sales, the redemption process does not always keep up with the market.
In May 2022, the so-called “algorithmic stablecoin” terraUSD collapsed after falling significantly below its $1 peg, causing a rapid change in sentiment and leading to a loss of confidence in the coin from the market, leading to its final collapse. It led to
In the month since Terra's collapse, Tether's Ardoino told Yahoo Finance that Tether was facing increased withdrawals as investors rushed to liquidate $10 billion worth of stock holdings in 11 days. He said he was there.
During the period, the price at one point fell to 95 cents, but gradually recovered to $1 over the next few weeks.
Today, Mr. Ardoino took to Twitter to take a defiant stance.
“We are ready as always. Let them come. We are ready to redeem any amount,” Ardoino said in a tweet.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
