Yesterday, the 17th of May, the cryptocurrency market was in green with Bitcoin and other major cryptocurrencies trading positively. However, this bullish trend didn’t last for long as the bearish trend had escalated during the TerraUSD stablecoin (UST) crash.
The world’s first cryptocurrency by market cap which had reclaimed $30,000 a few days ago has yet again dropped and is trading around $29,000. This has also affected the other major cryptocurrencies bleeding the crypto market.
Meanwhile, Tim Frost, Yield App founder, and CEO put forth his thoughts via email saying that the crash led by Terra’s UST has put an end to a momentous bull run.
He further added that the market is down by 54% from its all-time high and won’t be rallying anytime soon as the market looks to have a prolonged bear market.
The increased US inflation is also one of the reasons for the crypto market crash. The U.S central bank Chain Jerome Powell during The Wall Street Journal’s Future of Everything Festival held yesterday stated that it’s important to restore the price stability and added that he is positive about the Fed curbing the inflation without affecting employment.
Investor’s Stablecoin Preferences Take A Shift
The crash by LUNA and UST is still hovering around the global crypto market. This crash has not only affected the majority of the cryptocurrency price, but also the investor’s confidence in the stablecoin and its worth.
There is an inverse relationship between the issuance of Tether (USDT) and USD Coin (USDC) along with Binance USD (BUSD) and this is depicted by Glassnode data.
The data says that Tether tokens are more exiting circulation as it is being exchanged for cash whereas USDC and BUSD are used because of demand.
According to Glassnode analyst, James Check, the USDT redemption was around $7.5 billion, whereas the USDC supply increased by $2.64 billion and BUSD by $1 billion. Hence the total was around $3.64 billion in supply expansion and $7.5 billion in contraction which meant a net inflow of $3.76 billion.
James Check also believes that large traders took advantage of this moment to hop towards the USDT peg with the hope of generating downside fear and that did happen.
USDC has a long way to go before it ever gets a chance to flip Tether. However, with decreasing confidence over stablecoins, traders are more likey to lean towards USDC and BUSD more than Tether.