©Reuters. Bitcoin recovers and rises 3% after the crash of TerraUSD
(Updates EC4382 with the data at the close of the market in Europe)
Madrid, May 12 (.).- The , the best-known cryptocurrency in the market, has recovered from the drop in the early hours of the morning, when it lost more than 10% influenced by the collapse of the TerraUSD cryptocurrency, and at closing of the stock markets in Europe rises 3.2%, to 29,380 dollars.
According to market data consulted by Efe, the cryptocurrency lost the level of 30,000 dollars, its lowest level since November 2020, after the stable cryptocurrency (‘stablecoin’) TerraUSD lost its parity with the dollar and plummeted to a minimum of 23 cents.
The global markets strategist of the multi-asset investment platform eToro, Ben Laidler, considers that the drop that bitcoin has experienced since the beginning of the year was “significantly” worsened by the contagion of TerraUSD.
Unlike other stablecoins, TerraUSD is not backed by other assets, but instead maintained its parity with the dollar through a complex algorithm linked to Luna, an unbacked cryptocurrency.
The analyst of Julius Baer (SIX:) Sipho Arntzen notes that this crash has had “a strong ripple effect throughout the cryptocurrency ecosystem,” with many participants questioning the actual stability of stablecoins.
The Governor of the Bank of Spain, Pablo Hernández de Cos, has insisted this Thursday during a speech at the ISDA annual meeting on the risks involved in investing in crypto assets, and has indicated that most of those that currently exist “do not can be associated with terms such as solidity or stability”.
The European Union (EU) finalizes a regulation, known as MiCA, to regulate this type of assets.
De Cos has highlighted the rapid growth of the crypto-asset market, which in 2021 represented three trillion dollars compared to the 16,000 million it had five years before, although they still represent only 1% of global financial assets and the exposure of banks to today is limited.
From eToro they point out that exposure to crypto assets is very high, especially in retail investors, but not in institutional ones.
The co-founder of TerraUSD, the South Korean Do Kwon, after trying unsuccessfully to stabilize the fall by resorting to his bitcoin reserves, advanced yesterday that they will explore options to attract external capital and that they will seek to “rebuild” this digital currency with a mechanism backed by reserves. of an asset instead of the algorithm with which it worked until now.
With the fall of the last few days, bitcoin is already losing almost 60% from its historical maximums, registered six months ago, when it reached close to 69,000 dollars, and 37% in the year.
Along with bitcoin, other currencies have fallen, such as ether, the second most used, which moderates its fall to 1% after losing 7.15% in the morning.