It is a known fact that the crypto space is now in the midst of a notable bear market that has yet to bottom out. The flagship cryptocurrency, Bitcoin, currently appears to be struggling to restore the last line of defense above $20,000. In such a case, the cryptocurrency market crashes heavily, and at the same time, stablecoins possess extreme strength. Mainly due to the fact that traders simply swap their crypto assets into stablecoins and wait until the market recovers to re-enter.

Ever since the TerraClassicUSD (USTC) algorithmic stablecoin heavily lost its peg, traders are now more cautious towards stablecoins as well. Two events, currently signal that the bear market, now in 2022, will also heavily affect stablecoins.

Also Read: How Long Can Bitcoin (BTC) And Ethereum (ETH) Prices Hold The $20,000 And $1000 Levels?

Tether (USDT) loses 20% of its market capitalization in a month

The most popular stablecoin, Tether (USDT), which gained steam in the second half of 2020, seems to have shaken a lot in the last month. Due to the decoupling of the USTC, traders also dumped USDT by falling into a FUD. However, the platform had spent 3 billion USDT to stabilize the peg. To be sure, the stablecoin has held its peg so far, but the depleting market cap seems to be stabilizing since then.

The bear market in crypto, combined with all the other news about big players like Terra (LUNA), Celsius Network and 3AC collapsing (potentially) has forced traders out of their positions. Also, external factors like inflation, FED rate hikes, global war etc are pushing people not only out of crypto but also out of USDT for fiat. However, until USDT maintains its parity, it may not reach the destination of UST.

Also Read: Crypto Crash Not Over Yet, Market Cap May Drop Another 50% Dragging Bitcoin (BTC) Price Near $14,000 Very Soon!

UST 2.0 on the horizon, USDD and USDN Crash Hard

The collapse of the volatile asset-backed algorithmic stablecoin has also caused a wave of FUD among the other stablecoins. Like USTC, the Tron-based algorithmic stablecoin USDD had lost its peg to hit $0.95 levels while its backed asset TRX also continued to fall. To be sure, the platform quickly injected some liquidity which helped the stablecoin recover a bit to trade at $0.97 at press time.

On the other hand, Neutrino USD (USDN), which is a crypto-collateralized stablecoin pegged to the US dollar, also crashed hard at the same time. However, the stablecoin is still struggling very hard to recover its value, as after bottoming out at $0.916, the asset is still trading at $0.94.

Collectively, the bear market is poised to impact all crypto assets in the market and stablecoins are no exception. Traders exiting their positions due to outside pressure could continue as the broader markets also appear in exhausted positions.

Also Read: Deciphering The Possibility Of USDD Falling Further, How Tron DAO Is Set Up To Protect

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This post Is UST 2.0 on the horizon, USDD, USDN and USDT face a big hurdle?

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