Bitcoin, Avalanche to Solana, cryptocurrencies stabilize after plunging on Terra, DeFi exodus
Cryptocurrencies steadied after the woes of the TerraUSD stablecoin triggered a flight from many popular digital tokens. Bitcoin climbed back to about $29,000 on Thursday from the lowest since 2020. Tokens like Avalanche and Solana that underpin some key decentralized finance protocols posted double-digit percentage gains.
The TerraUSD stablecoin was still below it $1 intended peg, while affiliated token Luna struggled. The crypto sector overall is nursing heavy losses for the week and sentiment remains fragile.
“UST’s collapse undercuts confidence in all liquidity protocols,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “If UST can fail, maybe Aave can too. Sort of like when Bear Stearns failed, it focused people’s attention on whether Lehman would fail.”
The TerraUSD algorithmic stablecoin -- also known as UST -- has been bouncing between 20 cents and 90 cents and was around 75 cents as of 10:35 a.m. in Singapore. Backers of the coin are trying to raise about $1.5 billion to shore up the token after it crashed from its dollar peg, according to the founder of a firm that was approached about the deal.
“Is the market getting spooked by what’s happening with Terra? The answer is yes,” Craig W. Johnson, chief market technician at Piper Sandler, said by phone. “Money-market funds are important to investors and right now we’re questioning the third-largest money-market fund in crypto land. People did not think we were going to break the buck on that and that’s clearly happened.”
Crypto sentiment was also hurt by elevated US inflation, which points to aggressive interest-rate hikes -- an unfavorable environment for risk assets. “There is extreme fear across the crypto market,” said Marcus Sotiriou, an
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