Crypto Market Dives – and Rebounds – Following UST De-Peg, US Inflation Report

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Bitcoin (BTC), ethereum (ETH) and the wider crypto market today experienced a sharp correction after the stablecoin terraUSD (UST) collapsed and a US inflation report revealed higher-than-expected price increases. However, prices changed later, marking a strong recovery of major cryptocurrencies.

As of 15:20 UTC, BTC was trading at USD 31,459, up more than 1% in the last 24 hours and 17% lower in the last 7 days.

BTC last 14 days:

Source: CoinGecko

Meanwhile, ETH, the second most valuable cryptocurrency, traded at $ 2,320, down 0.9% in the last 24 hours and 17% in the last 7 days.

ETH last 14 days:

Source: CoinGecko

The strongest sale began after a report of inflation in the US. UU. it was shown on Wednesday that prices rose 8.3% in April, more than the 8.1% expected by analysts.

Persistent, high inflation is one of the main factors that could cause US Federal Reserve (Fed) to raise US interest rates at an even faster rate. Earlier this month, the Fed raised rates by 0.5 percentage points, with Fed Chairman Jerome Powell indicating at the time that a similar rise would be seen at the next central bank meeting.

Meanwhile, the drama surrounding the Earth (LUNA) network and its UST algorithmic currency intensified on Wednesday, with LUNA collapsing to $ 0.69 and UST hitting $ 0.23 before both currencies began a recovery.

At the time of writing, LUNA had already cut some of its losses from the previous one, although it has held just over 90% for the past 24 hours at a price of $ 2.59. Over the same time period, the UST fell 43% to $ 0.51, still significantly below its $ 1 peg.

Commenting on Cryptonews.comMarcus Sotiriou, cryptographic broker analyst GlobalBlockHe said higher-than-expected inflation numbers “initially scared investors”.

“The most worrying aspect was the 0.6% increase in the basic CPI, which is higher than the 0.3% of the previous month,” Sotiriou said, adding that the fact that year-on-year inflation fell from March onwards continues being “positive” news.

“We have now received all possible bad news, so I suspect we may see some relief in the crypto and global markets,” the analyst added, noting that both the relative strength index (RSI) and the cryptographic fear and greed index have reached “levels” overselling “. ”.

“Usually, this indicates that we may have some relief soon,” Sotiriou said.

Not surprisingly, extreme volatility in the cryptocurrency market today has caused problems for at least one cryptocurrency exchange.

Agree with Binance CEO Changpeng Zhao (CZ), his exchange experienced “a high system load and blockchain.” CZ said that Binance’s peer-to-peer market had “a server problem” and said it should recover in the next 30 to 60 minutes. “All other systems (spot and futures) are fine,” the CEO added.

And while the settlement is likely to completely wipe out some investors in the crypto market, others have remained steadfast in their faith in Bitcoin.

“Inflation of 8.3%. I’m riding with BTC to death from the heat of the universe. Where else are you going to put your money right now? he asked Ryan Selkis, the founder and CEO of the cryptographic researcher Messari.

Similarly, Mike McGlone, Bloomberg IntelligenceThe commodity senior strategist hinted that BTC could be a good buy now in the medium to long term.

“Selling in May and disappearing are playing into most risky assets, but Bitcoin seems ready to move forward. The S&P 500 drops to 4,000 and its 100-week moving average could trigger the end of the Fed’s rate hike.” , McGlone. he wrote on Twitter.

Finally, Anto Paroian, CEO of the cryptocurrency hedge fund ARK36said about the current state of the bitcoin market that the sale “is not markedly different from how it reacted during its previous bear markets”.

He pointed out that bitcoin is “an institutional-grade asset now and that has been a blessing and a curse for it.”

It is a curse because it “no longer exists in a vacuum,” but is “intertwined with the broader investment world,” Paroian said, adding that it is also a blessing because institutions have “strengthened.” [bitcoin’s] resilience ”.

Learn more:
– From Kwon Floats Earth Ideas to save UST as LUNA collapse continues
– Fed expects “soft landing” for US economy, but history suggests it won’t avoid recession

– Ethereum’s price target for 2022 has fallen again but new highs are still at stake – Poll
– While Bitcoin continues to close, Arthur Hayes joins the chorus of $ 1 million BTC predictors and warns of “The Doom Loop”

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