According to CoinDesk, according to a report released by Citigroup on May 13, the cryptocurrency market has been under pressure in the past week after the collapse of the third largest stablecoin terraUSD (UST).
The decline in the crypto market comes against a backdrop of already weakening risk assets, which Citi said is not expected to have a broader impact on the economy as the digital asset market remains relatively small compared to traditional asset classes and the composition of household wealth. Influence.
Analysts said they did not see a significant "leading effect" of Bitcoin on S&P 500 futures.The recent weakness in bitcoin and stocks appears to be correlated, the report said.Still, given the current gloomy sentiment in the stock market, the decline in the crypto market doesn’t help.
Bitcoin is expected to remain highly volatile and will be affected by a number of factors, including potential regulatory action, the report added, with analysts noting that the price of Bitcoin has fallen closer to the valuation implied by its production costs and spot adoption models .
Citibank sees the production cost as a bottom line, because if the price is lower than the cost, then this phenomenon is not good for the miners, which can lead to a decrease in the hash rate, and the difficulty of the algorithm may be reduced to keep the Bitcoin mining reward rate constant. Change.
Finally, Citibank stated that after the decoupling of UST, regulatory sanctions on stablecoins may increase.
Author: Zeqi YI
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