Stablecoins that alter their supply to maintain their value are struggling to keep up with volatile markets.
Crypto markets have lost roughly 30 percent off of their total market capitalization over the past seven days. As crypto prices continue to tumble, and traders scramble to close their volatile holdings, the stablecoin market is surging: according to CoinTelegraph, the total stablecoin supply has grown by roughly 190% over the past 90 days. However, not all stablecoins are created equal.
Amidst the valuation bloodbath, centralized stablecoins are performing better than ever–Tether (USDt) and Centre’s USD Coin (USDC) are respectively #3 and #10 in CoinMarketCap’s list of largest coins by market cap. Data from CoinGecko shows that together, the two coins hold roughly 80% of all stablecoin market capitalization.
While these centralized stablecoins are performing well amidst the crypto market crash, algorithmic stablecoins are another story. Algorithmic stablecoins hold their value by automatically increasing or decreasing their own supply or the supply of the asset to which they are pegged. However, according to CoinTelegraph, some of these coins have lost their pegs.
“This Too Shall Pass”?
For example, TerraUSD (UST), which is tied to the LUNA coin, was sitting around $0.95 at press time, having fallen as low as $0.92 on Sunday, May 23rd. The Twitter account associated with decentralized Liquidity protocol, THORChain said that the asset was being 'stress-tested', and urged followers to 'Back the builders'.
Terra founder Do Kwon and “team/backers have their fingers on the pulse and are moving fast,” THORChain wrote.
Do Kwon said in a tweet on May 23rd that while the Terra economy was experiencing stress “none of the fundamentals in [the Terra ecosystem] have changed. asserting the project has been. “The ecosystem is significantly de-risked for having survived one of the worst market crashes in crypto,” he wrote.
“Building pure, unbiased and decentralized money is the long game,” Kwon said.
The Terra Twitter account wrote that: ”Our community will emerge stronger from this ephemeral market turmoil. This too shall pass.”
However, not everyone is convinced. One Terra follower wrote that: “What is scaring me is that $UST has not retained its peg to the dollar. It keeps peaking below a dollar and falling back down. Any explanations?? (sic)”
Still, another user explained that: “it’s because it’s an algorithmic stablecoin, it has to constantly burn/mint UST/LUNA to keep its peg. I’ve always seen it come back to a dollar tho, so not worried. (sic)”
Other algorithmic stablecoins are even further away from their $1 target pegs. CoinTelegraph reported that Ampleforth (AMPL) fell to $0.48 on May 23rd, its lowest level in an entire year. On the other hand, the Ether-backed RAI algorithmic stablecoin has managed to stay relatively close to its target peg of $3 throughout the market crash.
Crypto markets have lost roughly 30 percent off of their total market capitalization over the past seven days. As crypto prices continue to tumble, and traders scramble to close their volatile holdings, the stablecoin market is surging: according to CoinTelegraph, the total stablecoin supply has grown by roughly 190% over the past 90 days. However, not all stablecoins are created equal.
Amidst the valuation bloodbath, centralized stablecoins are performing better than ever–Tether (USDt) and Centre’s USD Coin (USDC) are respectively #3 and #10 in CoinMarketCap’s list of largest coins by market cap. Data from CoinGecko shows that together, the two coins hold roughly 80% of all stablecoin market capitalization.
While these centralized stablecoins are performing well amidst the crypto market crash, algorithmic stablecoins are another story. Algorithmic stablecoins hold their value by automatically increasing or decreasing their own supply or the supply of the asset to which they are pegged. However, according to CoinTelegraph, some of these coins have lost their pegs.
“This Too Shall Pass”?
For example, TerraUSD (UST), which is tied to the LUNA coin, was sitting around $0.95 at press time, having fallen as low as $0.92 on Sunday, May 23rd. The Twitter account associated with decentralized Liquidity protocol, THORChain said that the asset was being 'stress-tested', and urged followers to 'Back the builders'.
Terra founder Do Kwon and “team/backers have their fingers on the pulse and are moving fast,” THORChain wrote.
Do Kwon said in a tweet on May 23rd that while the Terra economy was experiencing stress “none of the fundamentals in [the Terra ecosystem] have changed. asserting the project has been. “The ecosystem is significantly de-risked for having survived one of the worst market crashes in crypto,” he wrote.
“Building pure, unbiased and decentralized money is the long game,” Kwon said.
The Terra Twitter account wrote that: ”Our community will emerge stronger from this ephemeral market turmoil. This too shall pass.”
However, not everyone is convinced. One Terra follower wrote that: “What is scaring me is that $UST has not retained its peg to the dollar. It keeps peaking below a dollar and falling back down. Any explanations?? (sic)”
Still, another user explained that: “it’s because it’s an algorithmic stablecoin, it has to constantly burn/mint UST/LUNA to keep its peg. I’ve always seen it come back to a dollar tho, so not worried. (sic)”
Other algorithmic stablecoins are even further away from their $1 target pegs. CoinTelegraph reported that Ampleforth (AMPL) fell to $0.48 on May 23rd, its lowest level in an entire year. On the other hand, the Ether-backed RAI algorithmic stablecoin has managed to stay relatively close to its target peg of $3 throughout the market crash.
Rachel is a self-taught crypto geek and a passionate writer. She believes in the power that the written word has to educate, connect and empower individuals to make positive and powerful financial choices. She is the Podcast Host and a Cryptocurrency Editor at Finance Magnates.
Bitget's Bitcoin Reserve Ratio Soars Over 300% Following Halving
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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