Cryptocurrencies test a rebound and there is a warning about a possible regulation of stablecoins

The crypto leader has lost regarding a fifth of its value so far this month on the collapse of stablecoin TerraUSD and a wave of venture investment selloffs. Bitcoin is seeing a 21% loss so far in May, the worst monthly drop in a year, following the market was hit hard by the collapse of stablecoin TerraUSD and Tether’s brief decline.

Small amounts of dip buying tentatively gave Bitcoin a boost, but much of the retail and institutional world still bears massive wounds from the recent crash.”wrote Edward Moya, senior market analyst at Oanda for Bolsamanía.

Investors have massively withdrawn their investments from both cryptocurrencies and stablecoins since the crisis began. The total circulation of Tether, the largest and most systemically important stablecoin, is down by more than $7 billion since May 7when Terra’s decoupling became apparent, CoinGecko data shows.

Although the TerraUSD and Tether stablecoins operate differently, the subsequent drop in Tether’s dollar parity to 96 cents on May 12 triggered a wave of bailouts, leading regulators to question whether such assets are suitable for widespread adoption. during the fiascoTether said it would continue to accept USDT swaps at a one-for-one value on its own site, while trades were subject to the actual market value of the token at the time.

“The fallout from the collapse of UST might be felt for a long time and will likely expand regulatory oversight of the stablecoin space”blockchain data provider Kaiko said in a Monday research note.

“The collapse of Terra, LUNA and the UST made crypto investors very cautious and brought back bad memories of the past,” commented Naeem Aslam, Analyst at Avatrade. “The fall of Terra reminded investors how risky cryptocurrency investments are, and that they should think before putting their savings into this asset class”he continued.

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