The crypto market dropped in May, but June has a silver lining

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May 2022 was not for the faint-hearted. Even the most embittered and seasoned crypto traders were tested in the first two weeks of the month on a brutal fall after the United States Federal Reserve announced that interest rates would rise by 0.5%.

Crypto displayed little correlation with real-world events and was generally unaffected by capitalist successes and failures. However, a very stable projected peg between bitcoin (BTC) and the S&P 500 index was seen in the first five months of 2022. Inflation and war fears have not been kind to the markets either.

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Bitcoin fell below $29,000 to return to $31,800 on May 31, while ether (ETH) fell just above $1,700 before retesting prices above $1,900 by May 30. But many altcoins underperformed, and the resulting reactions from once patient traders turned into almost as much FUD as one would imagine.

Four stable coins, two different directions

TeraUSD (UST) was a stablecoin built on the Tera blockchain and sat in the top six stablecoins by market cap. However, on May 9, the coin, which was designed to maintain a $1 value at all times, progressively dropped to $0.29, leaving the crypto world in shock. Since then its price has not been recovered.

As for how this affects the rest of the stablecoin landscape, a major “shuffle of the deck” resulted from an overnight explosion of the reputation of a reliable stablecoin. The largest stablecoin by market cap, Tether (USDT), saw itself decline, albeit a far less sharp one, falling to $0.95. It has since recovered, but there have been renewed claims about the coin’s solvency.

The bounty between Dai and the USD Coin (USDC) debacle appears to be reaping as the chart above clearly indicates that the top 10 largest whale addresses from each stablecoin show an increased confidence level in these two assets, and the coin USDT. From the exchanges are moving in massive waves. and UST (now TeraUSD Classic). Binance USD (BUSD) also cannot be ignored, as the third-largest stablecoin soared to a nearly $19-billion market cap last month.

LUNA’s Tragic Fall from Grace

UST’s sister token Luna Classic (LUNC) fell from its all-time high of $119 just seven weeks ago and now sits at $0.000125, equivalent to a -99.9999% decrease in price and market cap. The dipping of UST from $1 appeared as the final nail in the coffin because the algorithm was not fast enough to burn LUNC when UST was in freefall due to the large takedown on the anchor protocol.