• News
  • Sport
  • TV
  • Radio
  • Education
  • TV Licences
  • Contact Us

For all official information and updates regarding COVID-19, visit the South African Department of Health's website at www.sacoronavirus.co.za

No Result
View All Result
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • SCI-TECH
  • LIFESTYLE
  • FEATURES
  • OPINION
Home Business

Crypto world stabilizes after rocky week shakes stablecoins

14 May 2022, 3:37 AM  |
Reuters Reuters |  @SABCNews
A representation of the virtual cryptocurrency Ethereum is seen among representations of other cryptocurrencies in this picture illustration taken June 14, 2021.

A representation of the virtual cryptocurrency Ethereum is seen among representations of other cryptocurrencies in this picture illustration taken June 14, 2021.

Image: Reuters

A representation of the virtual cryptocurrency Ethereum is seen among representations of other cryptocurrencies in this picture illustration taken June 14, 2021.

Cryptocurrencies steadied on Friday, with bitcoin recovering from a 16-month low after a volatile week dominated by the collapse in value of TerraUSD, a so-called stablecoin.

Crypto assets have been swept up in broad selling of risky investments on worries about high inflation and rising interest rates, but have started showing signs of settling.

Although the near-term trajectory of the crypto market is challenging to predict, the worst may be over, said Juan Perez, director of trading at Monex USA in Washington.

“Perhaps now that all the obstacles to global growth along with monetary tightening are clear, perhaps we will start seeing swings upwards,” he said.

Bitcoin , the largest cryptocurrency by market value, last rose 4.85% to $29,925, rebounding from a December 2020-low of $25,400 which it hit on Thursday.

Although it hit a high of just under $31,000 on Friday, bitcoin remains far below week-earlier levels of around $40,000 and unless there is a huge weekend rally it is on track for a record seventh consecutive weekly loss.

Stifel chief equity strategist Barry Bannister said bitcoin still has further downside to about $15,000.

“Bitcoin is also GDP-sensitive, because bitcoin falls when the PMI Manufacturing index drops, as we expect (into the third quarter of 2022), indicating that a last, capitulatory bitcoin drop may be still ahead,” he added.

Ether, the second largest cryptocurrency in terms of market cap, also gained, climbing 6.48% to $2,051.

Tether, the biggest stablecoin whose developers say is backed by dollar assets, was back at $1, after falling to 95 cents on Thursday.

TerraUSD, however, the stablecoin that is also supposedly pegged to the dollar, continued to languish, at 14 cents, according to data tracker CoinGecko. It has remained de-pegged from the U.S. currency since May 9.

The crypto sector’s overall market capitalisation rose 6.6% to $1.35 trillion on Friday, CoinGecko data showed.

Broader financial markets have so far seen little knock-on effect from the cryptocurrency crash. Ratings agency Fitch said in a note on Thursday that weak links to regulated financial markets will limit the potential of crypto market volatility to cause wider financial instability.

“Crypto is still tiny and crypto integration within broader financial markets is still infinitesimally small,” said James Malcolm, head of FX strategy at UBS.

BEYOND BITCOIN

Crypto-related stocks have taken a pounding with the meltdown in the market, but on Friday, broker Coinbase (COIN.O) rose 16% to $67.87, although it is still down 28% on the week.

Selling has roughly halved the global market value of cryptocurrencies since November, but the drawdown turned to panic in recent sessions with a squeeze on stablecoins.

Stablecoins are tokens pegged to the value of traditional assets, often the U.S. dollar, and are the main medium for moving money between cryptocurrencies or for converting balances to fiat cash.

Cryptocurrency markets were rocked this week by the collapse of TerraUSD (UST), which broke its 1:1 peg to the dollar.

The coin’s complex stability mechanism, which involved balancing with a free-floating cryptocurrency called Luna, stopped working when Luna plunged close to zero.

“For these types of stablecoins, the market needs to trust that the issuer holds sufficient liquid assets they would be able to sell in times of market stress,” analysts at Morgan Stanley said in a research note.

The operating company of another stablecoin called Tether said it has the necessary assets in Treasuries, cash, corporate bonds and other money-market products.

But stablecoins are likely to face further tests if traders keep selling, and analysts are concerned that stress could spill over into money markets if there is more and more liquidation.

Fitch said cryptocurrencies and digital finance could face “significant negative repercussions” if investors lose confidence in stablecoins, as many regulated financial entities have increased their exposure to the sector in recent months.

Share article
Previous Post

Queen Elizabeth visits horse show after missing parliament opening

Next Post

Blood marker identified for babies at risk of SIDS hailed as ‘breakthrough’

Related Posts

Customers buy vegetables at a market in Ahmedabad, India,

India considering spending additional billions to fight inflation

22 May 2022, 5:41 PM
The Eskom Megawatt Office Park in Sunninghill.

Eskom admits to failure to find solutions to some of its ongoing problems

22 May 2022, 11:06 AM
Load shedding in a retail shop.

City of Johannesburg looking for alternative ways to keep the lights on

22 May 2022, 9:27 AM
Children fill up empty cigarettes manually with locally grown tobacco in a factory at Haragach in Rangpur district, Bangladesh, July 2013.

Attendees at the 5th Global Conference commit to eradicate child labour

22 May 2022, 8:33 AM
A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio, Spain, June 20, 2017.

Siemens Energy launches $4.3 billion bid for remaining Siemens Gamesa stake

22 May 2022, 1:49 AM
Empty shelves show a shortage of baby formula at CVS in San Antonio, Texas, U.S. May 10, 2022. REUTERS/Kaylee Greenlee Beal/File Photo

Biden says first shipments of baby formula flying in from Europe this weekend

21 May 2022, 6:51 PM
Next Post
Baby feet

Blood marker identified for babies at risk of SIDS hailed as 'breakthrough'

Most Viewed

  • 24hrs
  • Week
  • Month
  • EMS says fire at Bree Street Taxi Rank in Johannesburg has been extinguished
  • The public has until 18 May to make submissions on Icasa’s regulations for extension of expiry period for data, airtime
  • ANC NEC expected to hold a special meeting on Sunday
  • Eastern Cape flood victims plead for support as access to food, services remains difficult
  • Amathole Regional Secretary elated to have corruption charges against him dropped
  • Calls for law enforcement to activate action plan to arrest Namhla Mtwa’s killer
  • Several roads affected due to flooding in parts of KZN
  • Russia uses new laser weapons in Ukraine, Zelenskyy mocks ‘wonder weapon’
  • Family of Deborah Fraser had hoped she would recover in hospital
  • Former president Jacob Zuma’s corruption case back in court
  • SA may be home to world’s oldest person
  • Some R350 grant beneficiaries have not yet received April payments
  • Cosatu’s May Day celebrations descended into chaos, proceedings halted
  • Suspect arrested in connection with Hillary Gardee’s murder
  • Family wants justice for Namhla Mtwa who was killed in alleged hit

LATEST

Roggeveld Wind Farm
  • Sci-tech

Sutherland power grid boosted with wind power


  • Uncategorized

Ukrainian director denounces Russian presence at Cannes


Covid-19 Vaccine
  • Coronavirus

White House reviews authorisation of Moderna COVID shot for children under 5 years


Minister of Environment, Forestry and Fisheries, Barbara Creecy launches Thohoyandou Botanical Garden
  • South Africa

Environment Minister Barbara Creecy launches Thohoyandou Botanical Garden in Limpopo


The logo of state power utility Eskom is seen outside Cape Town's Koeberg nuclear power plant in this picture taken March 20, 2016. REUTERS/Mike Hutchings
  • South Africa

Stage two load shedding to be implemented throughout the week: Eskom


Iranian flag
  • World

Iranian colonel assassinated in Tehran


Weather

  • About the SABC
  • Contact Us
  • Jobs
  • Advertise
  • Disclaimer
  • Site Map

SABC © 2022

No Result
View All Result
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • SCI-TECH
  • LIFESTYLE
  • FEATURES
  • OPINION

© 2022

Previous Queen Elizabeth visits horse show after missing parliament opening
Next Baby feet Blood marker identified for babies at risk of SIDS hailed as ‘breakthrough’