{"id":447327,"date":"2022-05-15T12:10:00","date_gmt":"2022-05-15T09:10:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus\/"},"modified":"2022-05-15T12:10:00","modified_gmt":"2022-05-15T09:10:00","slug":"1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus\/","title":{"rendered":"# $1.9T wipeout in crypto risks spilling over to stocks, bonds \u2014 stablecoin Tether in focus"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4114d10107d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4114d10107d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus\/#%E2%80%9D_19T_wipeout_in_crypto_risks_spilling_over_to_stocks_bonds_%E2%80%94_stablecoin_Tether_in_focus_%E2%80%9C\" >&#8221; $1.9T wipeout in crypto risks spilling over to stocks, bonds \u2014 stablecoin Tether in focus &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus\/#Stablecoins_not_very_stable\" >Stablecoins not very stable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/1-9t-wipeout-in-crypto-risks-spilling-over-to-stocks-bonds-stablecoin-tether-in-focus\/#Crypto_spillover_risks\" >Crypto spillover risks<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_19T_wipeout_in_crypto_risks_spilling_over_to_stocks_bonds_%E2%80%94_stablecoin_Tether_in_focus_%E2%80%9C\"><\/span>&#8221; $1.9T wipeout in crypto risks spilling over to stocks, bonds \u2014 stablecoin Tether in focus &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>The cryptocurrency market has lost $1.9 trillion six months after it soared to a record high. Interestingly, these losses are bigger than those witnessed during the 2007&#8217;s subprime mortgage market crisis \u2014 around $1.3 trillion, which has prompted fears that creaking crypto market risk will spill over across traditional markets, hurting stocks and bonds alike.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/82a7fb2d-082c-46d7-8460-a0d12a64ef38.png\"><figcaption style=\"text-align: center;\"><em>Crypto market capitalization weekly chart. Source: TradingView<\/em><\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Stablecoins_not_very_stable\"><\/span>Stablecoins not very stable<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A massive move lower from $69,000 in November 2021 to around $24,300 in May 2022 in Bitcoin&#8217;s (BTC) price has caused a selloff frenzy across the crypto market. <\/p>\n<p>Unfortunately, the bearish sentiment has not even spared stablecoins, so-called crypto equivalents of the U.S. dollar, which have been unable to stay as &#8220;stable&#8221; as they claim.<\/p>\n<p>For instance, TerraUSD (UST), once the third-largest stablecoin in the industry, lost its dollar peg earlier this week, falling to as low as $0.05 on May 13. <\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/4a9fdee9-191e-4f43-9714-f4d4931d5fb9.png\"><figcaption style=\"text-align: center;\"><em>UST\/USD daily price chart. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>Meanwhile, Tether (USDT), the largest stablecoin by market cap, briefly fell to $0.95 on May 12. But unlike TerraUSD, Tether managed to recover back to near $1, primarily because it claims to back its dollar peg using good old-fashioned reserves, including the real dollars and government bonds.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Crypto_spillover_risks\"><\/span>Crypto spillover risks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>But that is where the trouble begins, according to a warning issued by rating agency Fitch last year. The agency feared that Tether&#8217;s rapid growth could have implications for the short-term credit market, where it holds a lot of funds, according to the company&#8217;s reserves breakdown disclosed <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/tether.to\/en\/transparency\/#reports\">here<\/a>.<\/p>\n<p>If traders decide to dump their Tether, the most-popular dollar-pegged stablecoin in the crypto sector, for cash, it would risk destabilizing the short-term credit market, Fitch noted.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">Crypto losses now equal $1.7 trillion. The 2007 subprime mortgage market was $1.3 trillion. <\/p>\n<p>It&#8217;s highly likely that Crypto will be the catalyst for accelerated global collapse. <\/p>\n<p>Weekend risk is HIGH. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/4Ewo73uTeg\">pic.twitter.com\/4Ewo73uTeg<\/a><\/p>\n<p>\u2014 Mac10 (@SuburbanDrone) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/SuburbanDrone\/status\/1524870565806366730?ref_src=twsrc%5Etfw\">May 12, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The credit market is already struggling under the weight of higher interest rates. Tether could further pressure it lower as it holds $24 billion worth of commercial paper, $35 billion worth of Treasury notes, and $4 billion worth of corporate bonds.\u00a0<\/p>\n<p>The signs are already visible. For example, Tether has been <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/markets\/currencies\/tether-has-reduced-its-exposure-commercial-paper-cto-says-2022-05-12\/\">reducing its commercial paper reserves<\/a> during the crypto correction in the last six months, its chief <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> officer,\u00a0Paolo Ardoino, confirmed on May 12. <\/p>\n<p>So, based on Fitch&#8217;s warning last year, many analysts fear that the &#8220;financial run&#8221; might soon spill over to the traditional market.<\/p>\n<p>That includes Joseph Abate,\u00a0managing director of fixed income research at Barclays, who believes Tether&#8217;s decision to sell its commercial papers and certificate deposit holdings before maturity could mean paying several months of interest in penalty.<\/p>\n<p>As a result, they could be forced to sell their liquid Treasury bills, which make up 44% of their net holdings.<\/p>\n<p><strong><em>Related:\u00a0What h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ened? Terra debacle exposes flaws plaguing the crypto industry<\/em><\/strong><\/p>\n<p>&#8220;We do not know what is going to happen, but the danger cannot be dismissed out of hand,&#8221; <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/91d7703f-482b-4a1c-bf43-d911b0fcc508\">opines<\/a> Robert Armstrong, the author of Financial Times&#8217; Unhedged <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letter, adding: <\/p>\n<blockquote><p>&#8220;Stablecoins have a total market capitalization of more than $150 billion. If the pegs all break \u2014 and they could \u2014 there will be ripples well beyond crypto.&#8221;<\/p><\/blockquote>\n<p class=\"post-content__disclaimer\">The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.\n<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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Interestingly, these losses are bigger than those witnessed during the 2007&#8217;s subprime mortgage market crisis \u2014 around $1.3 trillion, which has prompted&#8230;<\/p>\n","protected":false},"author":1,"featured_media":447328,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDUvN2MzZTgwN2UtZmFhYS00MjVlLTg2NzYtMDAxYmVlOWEzNjhkLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,81951,114542,74863,81262,76153,74939,75679,75493,76514,122378,74336,71511,73785,70359,36041],"class_list":["post-447327","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-bitcoin-analysis","tag-bond-investments","tag-cryptocurrencies","tag-cryptomarket","tag-dollar","tag-market-analysis","tag-market-capitalization","tag-stablecoin","tag-stock-market-indexes","tag-terra","tag-bonds","tag-government","tag-markets","tag-stocks","tag-tether"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/447327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=447327"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/447327\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/447328"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=447327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=447327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=447327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}