Riding The Wave News Summary #41

What Terra's Meltdown Means for Centralized Stablecoins Tether and USDC, Treasury’s Yellen Highlights Terra Collapse in Call for Stablecoin Legislation, & more

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News

Table of Contents

1. Tweets

2. What Terra's Meltdown Means for Centralized Stablecoins Tether and USDC

3. Treasury’s Yellen Highlights Terra Collapse in Call for Stablecoin Legislation

4. El Salvador buys the bitcoin dip, adding 500 coins to its balance sheet

5. Bitcoin Miners About to Be Hit With Record Difficulty as Profitability Drops

6. Bitcoin network transactions and fees surge amid investor de-risking

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Tweets

The Social Investing Network @SocialInvesting

🪙 📉 Is crypto crashing... for good? Find out on #TSIN ft. @ThomasPHolland

Full Interview:

Onchain Wizard @OnChainWizard

How to make a >800 million dollars in crypto attacking the once 3rd largest stablecoin, Soros style: Everyone is talking about the $UST attack right now, including Janet Yellen. But no one is talking about how much money the attacker made (or how brilliant it was). Lets dig in🧵

Will Clemente @WClementeIII

After a rebound this morning, the UST peg is dropping again. Down to 0.77

Plan©️ @TheRealPlanC

This indicator has signalled the last 4 major #Bitcoin capitulation drops. 3/4 times it acted as a leading indicator, giving a 2-10 week heads up of the impending #BTC event. I will be using this indicator again in the future until it doesn't work. #Crypto

Plan©️ @TheRealPlanC

Experienced holders, unfazed. #Bitcoin #Crypto

Plan©️ @TheRealPlanC

Technically we have not broken below the #Bitcoin low of last summer (28.8k), still a higher low. I know the bull narrative is hanging on by a thread 🧵 But, there is still a case, for now. #Crypto

Bitcoin Archive 🗄🚀🌔 @BTC_Archive

💥El Salvador now holds 2,301 #Bitcoin worth $72m!

Plan©️ @TheRealPlanC

The highest amount of #Bitcoin liquidity is currently at 30k across all exchanges. To be clear I am not saying 30k will hold or the liquidity will not get pulled, that it just where the highest amount of bids are currently. I am simply providing data. #Crypto

Will Clemente @WClementeIII

My question now is where will contagion show up from the UST meltdown? How many crypto funds & projects were holding UST? How many custodians lending clients funds in anchor? etc. This is crypto’s Bear Sterns/Lehman Brother’s moment, but here there are no gvt bailouts.

Watcher.Guru @WatcherGuru

BREAKING: US Inflation has fallen to 8.3%, marking a drop for the first time since August 2021.

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What Terra's Meltdown Means for Centralized Stablecoins Tether and USDC

As the market panics over the implications of Terra’s UST losing its dollar peg, questions have been raised about its asset-backed stablecoin competitors, Tether and USD Coin.

Tether (USDT) and USD Coin (USDC)—the two largest stablecoins by market cap, respectively—are backed by the U.S. dollar, meaning that the issuers of these coins ostensibly maintain reserves of cash or cash equivalents to back each coin that’s in circulation.

The idea being that if an investor decided to redeem their USDT or USDC, they would get exactly $1 back for every token that the stablecoin issuer sold.

“Tether holders should feel very secure that Tether will hold its peg since it is dollar backed and market forces do not affect it,” Collins told Decrypt in an email. “I wouldn't be surprised to see an increase in holders of algorithmic stablecoins start to move their money into asset backed coins like Tether."

“Since these coins are fiat collatorialized, there is less risk of dramatic fluctuations in the value of their currency reserves—provided they actually have 1:1 backing,” Xu told Decrypt in an email.

“I don't see any immediate risk to Tether and USDC (from the UST collapse) as they have a very different modus operandi,” he told Decrypt in an email. “In fact, UST has been keeping its peg partly because of USDT and USDC (and their deep liquidity), via UST's peg to the Curve 3pool.”

I’m not too worried about other stable coins as Terra was being extremely aggressive with their Bitcoin position which left them overextended and has caused them pain in the short term. In the long term, they could recover but with the 99% drop in value, it will be challenging to accomplish. I do expect it to recover to some extent assuming the project owners continue with it and don’t abandon it, especially with the large amount of Bitcoin they hold.

Full Article

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Treasury’s Yellen Highlights Terra Collapse in Call for Stablecoin Legislation

Treasury Secretary Janet Yellen today said that stablecoins need to be regulated by this year. In a hearing Tuesday, Secretary Yellen said that although digital assets may “promote innovation,” they could also “present risks to the financial system.”

The Treasury Secretary used the example of Terra, a blockchain which has a native stablecoin, UST. Yesterday, the stablecoin slipped below its dollar peg to $0.65.

Terra’s troubles happened because, unlike other big stablecoins (such as Tether and USDC, which are ahead of UST in terms of market cap), UST is not backed by a fiat currency in a bank or some equivalent.

Secretary Yellen today said: “A stablecoin known as TerraUSD experienced a run and declined in value. I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.”

Unfortunately, the government will likely use this situation against all stablecoins when no others are in the same situation but on the bright side, we may see regulation come into place at last.

Full Article