Coin that can destroy crypto

It’s been a nightmare for cryptocurrency investors for a few months, with billions wiped off the market in a matter of weeks, but it’s about to get much worse.

It’s been a nightmare for cryptocurrency investors for a few months, with billions wiped off the market in a matter of weeks, but it’s about to get much worse.

A US financial expert has pointed out one thing that could bring the entire cryptocurrency market down for good, and it could happen.

“Tether really is the lifeblood of the crypto ecosystem,” said Hilary Allen, a financial expert at American University. The New York Times† “If it implodes, the whole facade falls down.”

Tether is a so-called stablecoin, a newer type of cryptocurrency that aims to isolate itself from the extreme volatility of the rest of the crypto market by keeping prices stable, usually by pegging them to the price of a traditional currency. In the case of Tether, its value is pegged to the value of the US dollar, although it also issues tokens pegged to the Euro, Yuan and Gold.

It is the third largest cryptocurrency after bitcoin and ethereum, with a market cap of nearly US$83 billion (A$119.4 billion).

It was launched in July 2014 as RealCoin, rebranded as Tether in November and started trading in February of the following year.

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But Tether is now in trouble and under tremendous pressure from regulators and investors. It was fined US$18.5 million (A$26.6 million) last year by the New York Attorney General for lying about its financial reserves, and recent declines in the crypto market may have hinted at what could be. can come.

As prices plummeted in recent weeks, investors rushed to cash in on their Tether, forcing the company to spend $10 billion (14.3 billion dollars). They were able to meet demand, with executives saying they weathered the crisis “spotlessly”, but experts say the coin may not be so lucky next time.

If Tether collapses, the shockwaves could devastate the entire crypto sector, which is already in dire straits.

The crypto winter has now turned into a “polar vortex,” a senior executive at one of the world’s largest banks said in a blunt confession this week.

Throughout the year, cryptocurrency has endured a bear run.

However, things took a turn for the worse last weekend as investors panicked after the US central bank raised interest rates by 75 basis points.

It sparked fears of a global recession and crypto investors quickly retreated, with a massive sell-off and drastic price drop for some of the world’s top-ranked blockchains.

At its lowest point, the number one cryptocurrency, bitcoin, fell to $17,601.58 (A$25,300) on Sunday morning, although it had recovered somewhat at the time of writing and was around $20,000.

That’s a huge drop when you consider that bitcoin traded at US$36,141.33 (A$52,000) at the beginning of last month, according to CoinMarketCap.

In fact, its lowest price in recent weeks represents a whopping 74 percent in value since BTC’s all-time high in November, when it hit nearly $69,000 (A$99,000) per coin.

In fact, all of bitcoin’s gains in the past two years of the pandemic have been virtually wiped out – BTC hasn’t been this low since October 2020.

While cryptocurrencies have endured several winters and price swings, the banking pro says it was the most extreme given how widely used blockchain is now.

Irfan Ahmad, of State Street Digital in the Asia-Pacific region, said: the Australian Financial Review“This is the first time bitcoin and other cryptocurrencies have gone through such an inflationary environment.

“It’s the fourth crypto winter and the toughest given the wider adoption – we call it a polar vortex”.

That said, Mr Ahmad believes that some of the most prominent digital tokens like bitcoin and ethereum will survive the winter.

“But in terms of an asset class, we think [crypto] is here to stay,” he told the publication.

“There will be an evolution of the players and the protocols in the market.”

Cryptocurrency has seen a reckoning in recent weeks – and especially the last few days – as fears of a global recession mount amid rampant inflation and the US central bank raising interest rates.

Data showed that inflation in the US had reached a new high – rising to 8.6 percent in May, the worst since 1981.

The US Federal Reserve raised its interest rate by 75 basis points to counter rising inflation.

Cryptocurrency is closely aligned with the traditional stock market and in the past week, markets like Dow Jones tanked and entered a bear run.

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