The collapse of cryptocurrencies to a minimum... What is their fate?

• Future digital currencies are collapsing. After the emotional shock of losing 200 trillion dollars

A sharp downward wave hit the demand for the digital currency, which lost billions in value in a day and a half due to the collapse of Bitcoin.

The cryptocurrency fell amid an increase in sentiment after US consumer confidence data hit an all-time low as investors preferred to maneuver towards the US dollar to avoid accelerating sentiment.

The pace of cryptocurrency declines has increased with the possibility of a sharp increase in interest rates at next week's Federal Reserve meeting.

Heavy losses

During these trading hours on Sunday, the value of cryptocurrency demand fell to its lowest level since February 2021, which is around 16 months.

Demand for the cryptocurrency has fallen from 1.3 trillion koi before the massive drop to more than 200 billion koi to less than 1.1 trillion koi, according to US bond data.

Wall Street took a storm last Friday after disastrous sentiment data prompted traders to abandon riskier instruments and move to safe havens such as gold and bullion.

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The Dow Jones Industrial Average lost 2.7 or 880 points, the Nasdaq 100 tech lost 415 or 3.5, and the Quality & Poor's 500 lost 2.9 or 117 points.

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Official data showed that the US consumer price index rose steadily to 8.6 in May, the highest level since 1981, up from 8.3 in April of the previous year.

US consumer confidence is at an all-time low, and the impact of the US remains weak.

Thus, the University of Michigan consumer confidence index in the United States fell to 50.2 points in the first measurement in June, compared to expectations that showed a record high of 58.1 points in May last year.

The data affected investor expectations as opinion polls began raising the probability of a US interest rate hike in July by 75 basis points instead of 50 basis points.

• Binance's decision

Cryptocurrency exchange Binance announced some time ago that it had decided to stop depositing and withdrawing funds from the account due to the sharp drop in demand for cryptocurrencies.

Binance CEO Changpeng CZ tweeted: “BTC USD withdrawal will be resolved in about 30 minutes due to delays on Binance.” “Moral support for all critics is moral support. Inventory phone number for services,” Reddit wrote when he entered the popular cryptocurrency among several sub-forums, blaming the US Federal Reserve.

As Natalie Jansson, a cryptocurrency economist at Neuma Graduate School of Economics, says, “It is easy to experience a real catastrophe in this industry. It is not the first time that the prices of these currencies have fallen before a significant increase in tax requirements. As the tax expert recalls, This last time happened around the same time: “When China decided to limit the use of this currency, Bitcoin lost half its value.”

He points out that these large price swings have always been caused by "reasonable reasons" for his position, whether it was a political decision from Beijing or stock market manipulation by bookmakers. "First stop". currency in 2017.

Therefore, the sharp drop in prices that we are currently witnessing is no exception to the current rule. But the fault lies with the US Federal Reserve. Indeed, cryptocurrencies are reacting like stocks of other technology companies, which so far has been a disastrous start to the US Federal Reserve's decision to raise interest rates.

“When interest rates are renegotiated, higher returns are available from risky investments such as bonds, which can force investors to abandon safe investments such as cryptocurrencies,” explains Natalie.

• Tera, the stable cryptocurrency that rocks everyone

Moreover, this end has another end. An important component of the entire hatchery system began to stop working. “Terra’s crypto turmoil has accelerated the overall price decline,” says Natalie Jansson.

* -Which consists?

Tera is referred to as a “stablecoin”, which indicates that it is a cryptocurrency that fluctuates quite a bit, unlike the group of coins with fixed prices and large maturities. It is also one of the most important currencies after Tether, with a market capitalization of $80 billion. Since these stablecoins are bones, they are usually pegged to a similar “real” coin

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But for Terra it is a little different, it is not tied to another currency, it consists of a complex algorithm that ensures that its value does not exceed the bone value of each terra.

Excluding experience, this stablecoin depreciated to around 20 cents at the start of the week. As noted by Natalie, it is a little-known phenomenon related to this unusual invention: “Earth deposits on most platforms related to this cryptocurrency dropped from 14 billion bones to 9 billion bones on May 6, without knowing why or who. It happened. All... this the wealthy."

• The first extremism in the era of democratization of cryptocurrencies

Imbalances affecting these stablecoins can have devastating effects on the entire incubation system. In fact, the exchange from cryptocurrency to real currency, such as bones or the euro, takes place first and in most cases through another hard currency. This is part of the deal that provides stability to all sellers of these coins.

But Tether or other currencies if investors stop trusting Tera. Ironically, this is one of the industry's systemic problems in the February 2022 report from the Global Financial Stability Board.