Over the past 7 days, Bitcoin has lost 25% of its value, while the rest of the top coins feel even worse, losing about 40%. The Terra blockchain protocol stood out more than others, whose native token fell in price by more than 90% amid problems with pegging its native stablecoin UST to the real dollar. Recall that stablecoins should be pegged to the real dollar in a ratio of 1:1 and serve to facilitate investment transactions.
However, the value of UST immediately fell to $0.66, as a result of which market participants had well-founded questions regarding the team’s ability to hold the course. The protocol is trying to solve the problem by buying BTC to back UST, but so far there has been little effect. What is most interesting, Terra is not a small project, but quite a serious one, which for a long time occupied a place in the top 10 ranking in terms of market capitalization. Thus, investors who are ready to take on a high risk can purchase tokens for $5, although back in April they cost about $120.
Otherwise, the cryptocurrency market continues to be influenced by global events and a general decrease in the level of risk appetite, which is expressed in the sale of risky instruments and the transfer of capital into a reliable dollar. Yields on 10-year Treasuries have doubled since March, to 3%, which is higher than most sectors of the US stock market. In other words, the question “why buy risky stocks when you can earn more without risk?” extremely relevant. In such conditions, investors are not up to dangerous assets, which means that the capitalization of the crypto market will continue to decline, while BTC may fall in price to $20,000.