Digital assets market is struggling to exit death spiral fueled by inflation data and funds outflow
One of the biggest sell-offs in the cryptocurrency market continues with Bitcoin hitting prices the market hasn’t seen since 2020. Besides the disastrous price performance, traders are encountering issues with USDD stablecoins and USDN which lost parity with $1 under heavy selling pressure.
Stablecoins losing their peg
TRX and BTC-backed stablecoin USDD is currently down 1% following the outflow of funds from liquidity contracts as investors are moving their funds toward different classes of assets, like derivatives.
Previously, U.Today covered the increased demand for crypto-gold developed by Paxos Global, following the unexpected inflation data. With inflation worsening, financial institutions will have to take more serious measures, reducing the attractiveness of risky assets.
As for stablecoins, Tron DAO and Neutrino have already stated that they are taking action to defend the peg with $1. Justin Sun will provide $2 billion to defend the peg, while Neutrion is getting ready to inject part of their collateral into the market to increase the valuation of the stablecoin.
Bloodbath in the crypto market
The digital asset market stability issues started with the aforementioned inflation report which demolished the expectations of the majority of market participants who were betting on the next reversal in the cryptocurrency market.
Right after the unexpected macroeconomic data arrival, Ethereum faced problems of its own as the peg of the stETH/ETH pair was also in danger. Additionally, the plunge below the $1,150 price for ETH will cause a massive cascade of liquidations on the lending and borrowing market.
At press time, Bitcoin is trading at $23,628 and showing no signs of a reversal. As for Ethereum, the second largest cryptocurrency market is trading at $1,200.
