Ethereum’s failure to break AUD$3K may be caused by fears over stablecoins
ETH has stayed range bound between AUD$2,500 and AUD$3,000 since 12 May.
- Many prominent altcoins including AVAX, BNB have lost substantial value post the recent Terra (LUNA) debacle.
- Stablecoin issuer Tether has reduced its commercial paper reserves by 17% over the first quarter of 2022.
- Cryptocurrency exchange FTX's US subsidiary is set to allow its users to trade stocks using stablecoins.
Ethereum is up 3.6% over the last 24 hours. However, the altcoin has struggled to break past its AUD$3K resistance cleanly, currently trading at AUD$2,870.
ETH's lack of positive price momentum is a direct reflection of poor investor confidence in the space. Following the recent Terra (LUNA) wipeout, many prominent projects have been hit with a lot of monetary backlash. Avalanche (AVAX), for example, lost 50% of its value between 10–12 May after news emerged that the Luna Foundation Guard (LFG), a nonprofit subsidiary of Terraform, held around 1.97 million AVAX tokens in its coffers.
LFG is yet to offload any of its AVAX, something that could prompt more sell-offs in the near term. Terra also holds other tokens including Bitcoin (BTC) and Binance Coin (BNB) in its reserves. Both assets have seen their values dip by 17.8% and 19% respectively over the last 14 days.
The total market capitalisation of the digital asset sector is down approximately 7% since yesterday. ETH's valuation lies at AUD$348 billion (US$245 billion) with the altcoin accounting for a 18.2% share of the crypto market.
Tether's commercial paper holdings dip by 17% over Q1 2022
USDT stablecoin issuer Tether recently revealed that it had reduced its commercial paper investments while increasing its United States Treasury bills. The firm noted its reserves are "fully backed" in a recent blog so as to allay investor fears after USDT "depegged" to around US$0.98 on 12 May briefly.
Over the first 4 months of the year, Tether has slashed its commercial paper holdings by 17%, bringing them down from US$24 billion to US$20 billion. An additional 20% reduction seems to be in the works as per the firm's quarterly report. Tether has bumped up its investments across various money market funds and US Treasury bills by 13%, from roughly US$34.5 billion to US$39 billion.
FTX US set to allow stablecoin-based stock trading soon
Popular cryptocurrency exchange FTX is entering the equity trading fray. The firm's US wing is all set to launch a stock trading module — FTX Stocks — directly via its smartphone app. The platform will allow retail clients to fund their accounts with fiat-backed stablecoins like USD Coin (USDC) alongside traditional options such as wire transfers and credit card deposits.
Disclosure: The author owns a range of cryptocurrencies at the time of writing