Bitcoin returns below $ 30,000 as European regulators renew crypto alerts

Cryptocurrencies resumed their slides on Monday, dropping the gains they had made over the weekend, as regulators continue to cycle. European officials have reiterated the risks posed by cryptocurrencies. Bitcoin fell 5% to $ 29,700 in Asian trade on Monday, with stocks sliding along with concerns over high inflation and rising interest rates.

The world’s largest cryptocurrency has lost nearly one-fifth of its value so far this month, as the sudden fall of the so-called stablecoin TerraUSD has already plunged the crypto market into a sell-off of risky investments. TerraUSD, which broke its 1: 1 peg against the dollar last week and is currently trading around 14 cents, has drawn special attention to the important role they play in stablecoin and crypto systems, according to price site Koinzeco. Some of that attention has come from financial regulators.

Bank of France Governor Franোয়াois Villarre de Galhous said at a conference on Monday that cryptocurrencies could disrupt the international financial system if they are not regulated and interacted in a consistent and appropriate manner across jurisdictions. He pointed to the stablecoins, which he said were somewhat misnamed among the sources of risk. Separately, Fabio Panetta, a member of the European Central Bank’s executive board, said on Monday that stablecoins were too weak to run.

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Tether, the world’s largest stablecoin, lost his 1: 1 peg briefly on May 12 before recovering. Unlike TerraUSD, it is backed by traditional asset reserves, according to Tether’s operating company. On the same day, Bitcoin dropped to 25,400, its lowest level since December 2020, but recovered to $ 31,400 on Sunday. Ether, the second-largest cryptocurrency, fell 5.6% to $ 2,000 on Monday.

Elsewhere, regulators are concerned. The US Federal Reserve warned last week that stablecoins were a risk for investors to run because they were backed by assets that could lose value or become ineffective under market pressure.

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