One of the biggest sell-offs on the cryptocurrency market continues with Bitcoin reaching prices the market has not seen since 2020. Besides the catastrophic price performance, traders are experiencing issues with USDD and USDN stablecoins that lost their peg with $1 under heavy selling pressure.
Stablecoins losing their peg
TRX and BTC-backed stablecoin USDD is currently down 1% following the outflow of funds from liquidity contracts as investors are moving their funds toward different classes of assets, like derivatives.
Previously, U.Today has covered the increased demand for crypto gold developed by Paxos Global, following the unexpected inflation data. With aggravating inflation, financial institutions will have to take more serious action, pushing the attractiveness of risk-on assets down.
As for stablecoins, Tron DAO and Neutrino have already stated that they are taking action to defend the peg with $1. Justin Sun will provide $2 billion to defend the peg, while Neutrion is getting ready to inject part of their collateral into the market to increase the valuation of the stablecoin.
Crypto market bloodbath
Issues with the stability of the digital assets market started with the abovementioned inflation report that demolished the expectations of the majority of market participants that were betting on the upcoming reversal of the cryptocurrency market.
Right after the unexpected macroeconomic data arrival, Ethereum faced problems of its own as the peg of the stETH/ETH pair was also in danger. Additionally, the plunge below the $1,150 price for ETH will cause a massive cascade of liquidations on the lending and borrowing market.
At press time, Bitcoin trades at $23,628 and is not showing any signs of reversal. As for Ethereum, the second largest cryptocurrency market trades at $1,200.