The Bitcoin (CRYPTO: BTC) price has fallen below the key psychological level of US$30,00.
At the time of writing Bitcoin is trading for US$29,830, down 4.8% since this time yesterday. Over the past 24 hours, the token traded as low as US$28,170, according to data from CoinMarketCap.
That puts the world's top crypto by market cap down 25% over the past week and down 40% year-to-date. Crypto investors who bought at the record high Bitcoin price on 10 November will be nursing losses of 57%.
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Why are cryptos selling off?
Ordinarily, it's the Bitcoin price that sets the tone in crypto markets, with most altcoins following in their big siblings' virtual footsteps.
But that doesn't appear to be the case with the latest round of selling.
Much of the pressure facing the Bitcoin price looks to be connected to the woes plaguing TerraUSD (CRYPTO: UST). (Details here.)
UST, as you may be aware, is intended to be pegged to the US dollar. But last night the stablecoin was anything by stable, plunging from its intended peg of US$1 to 30 US cents.
That in turn saw Terra (CRYPTO: LUNA) fall by a gut wrenching 97% over the past 24 hours. LUNA is meant to hold the price of UST right at US$1, with investors holding UST able to swap it for US$1 worth of LUNA at any stage.
So, what does this have to do with the Bitcoin price?
Bitcoin price falls amid US$3 billion sale
As if the 3.2% overnight fall in the Nasdaq didn't throw up enough tailwinds for the Bitcoin price, the world's original token came under additional pressure from the Luna Foundation Guard. In an effort to revive the UST US dollar peg, the Foundation reported it will sell its US$3 billion of Bitcoin reserves.
According to Jaime Baeza, CEO of crypto hedge fund ANB Investments (quoted by Forbes), "This accelerated the selloff of the broader crypto market as panic spread, and a more black swan systemic-risk event loomed closer."
Baeza added:
Crypto markets have been under pressure given macro events – tighter monetary policy, surging inflation, Russia's invasion of Ukraine – and the correlation between Bitcoin and global equities is high. However, the most recent fall in crypto prices is more due to the de-peg of the UST.
With the leading global stablecoin now showing even more volatility than the Bitcoin price, proceed with care.
