Cryptocurrencies continued to decline on Monday, giving up the gains of deficiencies over the weekend, as regulators continued to patrol.
Warnings of risks posed by cryptocurrencies have been reaffirmed by European officials.
On Monday, Bitcoin fell 5% to around $29,700 in Asian trade, slipping alongside stocks because of rising interest rates and high inflation worries.
As TerraUSD loses one fifth of its value this month, the world’s largest cryptocurrency has triggered the fall of crypto markets and broad selling of risky investments.
After breaking its 1:1 peg to the dollar last week, TerraUSD is currently trading near 14 cents. Stablecoin and its important role has been highlighted significantly in the crypto system. They have attracted some attention from financial regulators as well.
At a conference on Monday, Bank of France Governor Francois Villeroy de Galhau said that if crypto assets were not monitored and made interoperable in a consistent and appropriate manner across jurisdictions, they could cause turmoil to the international financial system.
On Monday, Fabio Panetta, member of the executive board of the European Central Bank, also said that stablecoins were susceptible to run.
Tether, one of the world’s largest stablecoin, briefly lost its 1:1 peg on May 12, before bouncing back. According to its operating company, Tether is supported by reserves in traditional assets unlike TerraUSD.
Bitcoin dropped as far as $25,400 on the same day, its lowest level since December 2020, but recovered to as high as $31,400 on Sunday.
Ether, the second-largest cryptocurrency, fell 5.6% to around $2,000 on Monday.
Last week, the US Federal Reserve warned that stablecoins were susceptible to investor runs because they were backed by assets that could lose value or become illiquid in times of market turmoil.