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https://www.wsj.com/articles/bitcoin-falls-to-26-000-as-crypto-selloff-intensifies-11652340653
FINANCE
Bitcoin Falls to $26,000 as Crypto Selloff Intensifies
Cryptocurrencies have been hit by a steep stock selloff and the decoupling of a major stablecoin from
its peg
By Caitlin Ostroff Follow
May 12, 2022 3:30 am ET
Bitcoin plunged to its lowest level since December 2020 as a cryptocurrency selloff
gathered steam Thursday.
The world’s largest cryptocurrency by market value traded at $26,007.55, down 8.2% from
its 5 p.m. ET level Wednesday, according to CoinDesk. Bitcoin had fallen the last seven
consecutive days through Wednesday—its longest losing streak since March 2020,
according to Dow Jones Market Data. Ether tumbled 10.1% from Wednesday evening to
trade at $1,825.27 Thursday—its lowest level since July 2021.
Cryptocurrencies have come under pressure in recent days alongside stock markets.
Digital assets are increasingly moving in lockstep with equities as traditional money
managers such as hedge funds and family offices have entered the space during the last
two years, analysts say. Such funds may be more likely to sell crypto holdings during
periods of volatility rather than hold them.
Stocks staggered Wednesday as inflation proved to be stickier than economists had
anticipated, heightening concerns about how much the Federal Reserve may have to
further tighten financial conditions to curb inflation. Investors are worried that
aggressive interest-rate increases could weigh on growth, already a concern with Covid19 lockdowns in some Chinese cities and the war in Ukraine.
Crypto has also been hit by a de-pegging of what was formerly the third-largest stablecoin
by market value. Billed as being the least volatile part of the crypto universe, these assets
are pegged to the value of government-issued currencies. So-called stablecoin TerraUSD
has decoupled from its $1 peg in recent days, hitting 54 cents at 3 a.m. ET Thursday. Its
sister token Luna traded at 15 cents, down 97% from the previous 24 hours.
While the most popular stablecoins maintain their levels with assets that include dollardenominated debt and cash, TerraUSD is what is known as an algorithmic stablecoin,
which relies on financial engineering to maintain its link to the dollar.
The break in TerraUSD has also caused concerns that other stablecoins could break from
their typical levels. Tether, the largest stablecoin by market value, fell to 97 cents at 3 a.m.
ET.
Treasury Secretary Janet Yellen on Tuesday reiterated calls for Congress to authorize
regulation of so-called stablecoins.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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