Yesterday, May 17th, the cryptocurrency market was in the green with positive trading for Bitcoin and other major cryptocurrencies. However, this bullish trend did not last long as the bearish trend turned up during the TeraUSD stablecoin (UST) crash.
The world’s first cryptocurrency by market cap, which recovered $30,000 a few days ago, has fallen again and is trading at around $29,000. It has also affected other major cryptocurrencies that have bled into the crypto market.
Meanwhile, Tim Frost, the founder and CEO of Yield App, voiced his views via email, saying that the crash led to Terra’s UST has ended a significant bull run.
He further added that the market is down 54% from its all-time high and will not rally anytime soon due to the prolonged bear market in the market.
Rising US inflation is also one of the reasons for the crypto market crash. US central bank chain Jerome Powell, held yesterday during the Wall Street Journal’s Future of Everything festival, said it is important to restore price stability and said he is positive about the Fed trying to curb inflation without affecting jobs.
Investor’s stablecoin preferences take a turn
Crash by LUNA and UST is still hovering around the global crypto market. This crash has affected not only the majority of cryptocurrency prices, but also investor confidence in the stablecoin and its value.
There is an inverse relationship between Tether (USDT) and USD Coin (USDC) issuance as well as Binance USD (BUSD) and is represented by Glassnode data.
Data says that Tether tokens are more out of circulation as it is being exchanged for cash while USDC and BUSD are used due to demand.
According to Glassnode analyst, James Check, USDT redemptions were approximately $7.5 billion, while USDC supply increased by $2.64 billion and BUSD by $1 billion. So the total supply was about $3.64 billion in expansion and $7.5 billion in contraction, meaning a net inflow of $3.76 billion.
James Cheek also believes that large traders took advantage of this moment to create downside fear with the hope towards the USDT peg and it did.
USDC has a long way to go before Tether has a chance to flip. However, traders are more likely to lean towards USDC and BUSD than Tether, with less confidence on stablecoins.