Last week, Bitcoin (BTC) fell below $27,000. The technology bubble implosion and the drop in Stablecoins led to Bitcoin’s brief drop. It managed to recover to above $30,000 before falling again over the weekend.
Bitcoin has a long history of dramatic drops followed by a rally and an uptrend. This pattern could repeat. Granted, a downtrend is equally possible. Bitcoin holders need to watch the collapse of Stablecoins and how it shakes cryptocurrency investing.
Ex-colleagues said that UST’s Do Kwon was behind the failed Stablecoin. When the Stablecoin lost its $1 parity, UST-USD closed recently at just 16 cents. LUNA tokens, which are governance tokens responsible for stabilizing TerraUSD, also fell. Selling pressure spread to Bitcoin. The confusion around TerraUSD will hurt Bitcoin’s prices in the near term.
In the long-term, Bitcoin’s strengths over Stablecoins will shine. Bitcoin has a larger market capitalization. It has higher investor confidence. Most importantly, as crypto investors dump the most speculative holdings, they will buy Bitcoin. They are unlikely to sell crypto and buy physical assets such as gold. In the last few weeks, gold prices fell. Gold is now in the danger zone as it approaches the $1,800 level. Prices peaked in the last six months in the $1950 - $2000 range.
