The crypto market had a tough time due to the Terra-LUNA crash in May and the liquidity crisis in June. Selling continues as the US rate hike adds more pressure to the “crypto winter”. Now, the International Monetary Fund (IMF) says that an altcoin market will trigger the new crash.
IMF says this altcoin market will lead to sales
IMF Director of Money and Capital Markets Tobias Adrian suggested in an interview July 27 that crypto market sales are not over as stablecoins could lead to another crypto winter. The latest IMF economic outlook report shows dismal global economic growth in 2022 and 2023. Tobias Adrian made the following statements about the subject in the interview:
We may see more selling in both cryptocurrencies and risky asset markets such as stocks. Some ICOs may have more failures. In particular, some of the most affected algorithmic stablecoins are at risk. There are other projects that may fail.
The biggest names in the stablecoin market, alarmed by the IMF official:
- USDT, USDC, BUSD, DAI, FRAX, TUSD, USDP, USDN, XAUT, USDT, MIM, LUSD, GUSD, SUSD, HUSD, FLEXUSD, DOLA, YUSD
According to the IMF Chief, another crypto sale could fail even more in some cryptocurrencies, especially algorithmic stablecoins and even fiat-backed stablecoins. Adrian says stablecoins are not fully backed by cash and treasuries pose more risk.
After the Terra-LUNA collapse, it turned out that Tether was not supported one-on-one and could lose its stability. However, some stablecoins backed by cash reserves are less likely to fail.
Tether CTO Paolo Ardoino announced today that USDT does not have a Chinese trade certificate
Ardoino also shared that the total commercial paper risk decreased from 30 billion to 3.7 billion in the last year. Tether plans to reduce exposure to 200 million by the end of August this year and to zero by late October/early November. The IMF downgrades global economic growth amid rising inflation that risks an approaching recession. Adrian says a global regulatory approach is needed to regulate exchanges and wallet providers.
Bitcoin and altcoin markets fluctuate amid FOMC meeting
Bitcoin and altcoins are volatile as the Fed prepares for an interest rate decision between 75 and 100 basis points. The July FOMC meeting is crucial for the crypto and equity markets as the Fed put a 100 basis point rate hike on the table as inflation soared to 9.1% in June. Bitcoin and Ethereum are currently trading at $21,511 and $1,483 respectively. They gain value by 2.5% and 7% over the last 24 hours.
