The value of cryptocurrency is rising even more amid renewed greater risk aversion due to growing fears of a global recession caused by inflation.

The collapse of the value of the so-called TercoUSD stablecoin was widely blamed on the fact that on Thursday began the sale of crypto-assets, as a result of which bitcoin at one stage on Thursday reached a 20-month low.

The largest cryptocurrency at market value hit a low just above $ 25,400 after TerraUSD broke its peg to the US dollar.

Stablecoin – so named because such digital tokens are pegged to the value of traditional regulated assets – fell in value late Wednesday night, causing a shock wave through other such assets, including Tether, which also broke ties with the U.S. currency.

In the case of bitcoin, it lost nearly two-thirds of its peak value of $ 69,000 reached last November.

His demise tracked the so-called rise, mostly of technology, of shares on Wall Street.

While Amazon, Meta (owner of Facebook, Alphabet (known as Google) and Tesla led the Wall Street rally from the pandemic lows in 2020, they have since borne the brunt of this year’s sell-offs as their earnings and estimates fall deeper) when interest rates rise.

The Federal Reserve has signaled an aggressive way to raise rates – likely this will reflect a 0.5% increase this month in several meetings this year – in a bid to fight rising inflation.

The prospect of such a tightening in the coming months has also led to a 20-year high in the dollar – with a two-year low of the pound below $ 1.22 – but it has also raised fears that the US economy will suffer due to rising borrowing costs.

Despite a warning from the Bank of England, it was the risk of recession ahead for the UK economy last week, it continued to try to curb inflation expectations, raising the bank’s rate for the fourth time in a row – to 1%.

The COVID blockade in China has added economic unrest as a disruption in the global supply chain also threatens to fuel inflation further.

This is already due to demand that exceeds supply, and the consequences of Russia’s war in Ukraine, which harm the appetite of risk.

Recent developments have damaged Germany’s warning that Russia is now using energy as a “weapon” as Moscow has said it will cut off gas to the country via its main pipeline through Poland.

Asian markets set the tone Thursday for stocks: the FTSE 100, the DAX in Germany and the Paris CAC fell more than 2% in one fell swoop.

The tech Nasdaq – which lost more than 25% of its value this year – fell another 1% as a result of a big sell-off.

Suzanne Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said of the market crash: “Fears of rampant inflation and the sudden end of the era of cheap money have led to cryptocurrencies going down when investors break away from risky assets.

“Crypt fans, lulled by a false sense of security amid a sharp rise in prices during the pandemic, are now facing a rough awakening as assets fall around, air has fallen just under 20% since yesterday, despite a slight recovery over the past few hours .

“Bitcoin has again crawled up from a low of $ 26,000, reached early today, and is currently trading at $ 28,000, but has fallen 20% in the last five days.

https://news.sky.com/story/bitcoin-plunges-to-2020-low-as-investors-run-from-growing-global-recession-fears-12611344

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