A week in the crypto market feels like a few months

For the cryptocurrency market, last week was extremely turbulent as the third largest stable currency was wiped off the market in just a few days. Currently, the main focus is on the reserve of the largest currency stabilizer - the tether. For other information, Norway does not prohibit the consensus mechanism proof-of-work used in bitcoinie i Ethereum. By contrast, ethereum itself is one step closer to departing from the protocol proof-of-work, which will reduce the energy consumption of the Ethereum network by over 99,95%.

About the author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

Terra is making history, USDT is shrinking and USDC is growing

Last Monday we wrote that the largest decentralized stable currency stablecoin) - terraUSD (UST) - to some extent freed itself from pegged rate against the dollar over the weekend. A week later, both the terraUSD and her terra token (MOON FABRIC) may be dimmed. On Monday afternoon, the terraUSD started to deviate significantly from the dollar, triggering a veritable death spiral of the terra, taking the cryptocurrency further away from the dollar. Currently, the terraUSD rate is around $ 0,078, well below the planned price of $ 1. Before these events, the supply of terraUSD was around 18 billion, while currently there is only around 11 billion of this cryptocurrency on the market. To be able to redeem some of the cryptocurrency traded, her own token - terra - had to experience hyperinflation. From around $ 82, the terry price has dropped to its current level of around $ 0,00019. As these events unfolded, we published Artykuł explaining what the terry death spiral is all about. Let's face it, terra will surely be extinguished, however, the consequences of this event extend beyond the ecosystem of this particular cryptocurrency.

Most notably, the collapse of the terry course has attracted the attention of regulators around the world. Over the past two years, the cryptocurrency market has grown significantly - it can even be said to be so large that it can now pose a systemic risk to other asset classes. Regulators can't sit back and let this risk unfold before their eyes, so at some point they will have to react to mitigate the potential risks associated with cryptocurrencies. So while a week ago, regulators did not have sufficient reasons to introduce strict regulations in this industry, they certainly do. If governments deem it appropriate, they now have sufficient capacity to bury the industry with proper regulation. It should be noted, however, that regulations may also prove beneficial for currency stabilization. According to the article in The Telegraph released last week, the UK plans to legalize payments using stabilized currencies to support innovation, which will ultimately benefit the entire cryptocurrency market.

Given the normal pace of action by regulators, the risk of stringent regulation is by definition not short-term. On the other hand, the short-term risk is associated with other currencies, namely the largest currency stable - Tether (USDT). Over the years, Tether did not provide full transparency regarding the reserves backing its $ 75 billion stable currency. Immediately after the terry collapsed, the cryptocurrency market again began to worry about the tether reserve, which led to the sell-off of the cryptocurrency and release it from a fixed rate of $ 1 to just $ 0,95. Market makers and proptrading traders seem to have brought the tether price back to around $ 1 pretty quickly by buying the cryptocurrency at a discount and buying it directly from Tether for a unit price of $ 1. In the context of the buyout, Tether has acquired approximately $ 8 billion worth of tether since late last week, reportedly without any problems so far. It is said that there is no harm, which would not work for good, as part of the USDT supply has flowed into the second-largest USDC stable currency, the supply of which has increased by $ 7 billion in the last 2,5 days. USDC's issuer Circle is known for its high degree of transparency over its reserve.

This week our focus is definitely on tether. Although Tether has allegedly followed all buyouts so far, if there is even one piece of information that the company is unable to provide a buyout, there will be a fear in the cryptocurrency market that has not been seen since March 2020. The last week of fear in the market lasted months, in the event of a Tether insolvency, we are talking about fear for years due to mutual fears that Tether has been artificially pumping up the prices of cryptocurrency assets over the years, issuing cryptocurrency without full security.

Problems with bitcoin mining have reached record levels

Following in the footsteps European Unionthe Norwegian parliament voted on Tuesday against prohibition of the protocol proof-of-work. Although the consensus mechanism used by bitcoin and ethereum has been criticized for years for its enormous energy consumption, this was not a sufficient reason for most of the Norwegian parliament to vote in favor of the ban. Because Norway is responsible for about 1% mining potential for bitcoin, a possible ban would not be a serious blow to this cryptocurrency, but only a warning signal. Interestingly, bitcoin's network problems reached their greatest ever scale in the past week, meaning the network requires more computing power from miners than ever to confirm transactions. This is very beneficial in terms of bitcoin's resistance to attacks, but as a result, the network also uses more energy.

The first public ethereum fusion test is scheduled for June 8

Remembering about proof-of-work, the second largest cryptocurrency, ethereum, is one step closer to moving away from the protocol proof-of-work for proof-of-stake. On Friday, the developers of ethereum they announced that the first public test of the so-called the merger is scheduled for June 8. Fusion go) is the name of the transition from the protocol proof-of-work na proof-of-stake. A total of five tests have been carried out in the last months, but this will be the first public test of an existing network called Ropsten, which means that we are one step closer to the merger. After Ropsten and before the merger, it is planned to merge two other test networks. If all goes well with Ropsten and the next two test networks, it is realistic to assume that the merger will take place in August. It will reduce the energy consumption of the Ethereum network by more than 99,95%, lower inflation from 5,4 million to 0,5 million ethers per year, and provide staking rewards of up to 10% per year to ethereum owners.

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