Bitcoin (BTC) price slipped below the $27,000 mark Thursday for the first time in more than a year as the falling money supply and the downfall of the stablecoin TerraUSD continue to weigh on sentiment.
The number one cryptocurrency fell to $25,401 Thursday morning, marking the first time it dropped below the $26,000 since December 2020.
Bitcoin’s drop was followed by Ether (ETH), which declined to $1,789. This was the first time the second-largest cryptocurrency fell below the $2,000 level in nearly a year.
The sell-off in the crypto market came after a sharp drop in the stock market as a result of the worsening economic outlook and rising interest rates.
The new U.S. inflation data released on Wednesday showed that prices for goods and services were up 8.3% in April, just below the 40-year high.
Another factor that spooked investors and triggered the crypto selloff was the collapse of the controversial stablecoin protocol TerraUSD (UST). UST, a stablecoin meant to maintain its value of $1, cratered Wednesday below 30 cents, causing investors to abandon their decentralized finance investments.
The world’s largest stablecoin, Tether (USDT), also broke its $1 peg. Similar to UST, Tether was also designed to mirror the value of the US dollar, but the stablecoin slipped to 94.10 cents in early trading on Thursday.
Tether is one of the most important assets in the global crypto market as the token, like other stablecoins, was designed to provide investors with a secure place to store their cash between making bets on volatile cryptocurrencies.
By Senad Karaahmetovic