Bitcoin Drops To IDR 433 Million, European Regulators Remind Again About Crypto Risks

Bitcoin illustration. (Unsplash)

JAKARTA - The value of Bitcoin has decreased again, on Monday, May 16. In Asian trading, Bitcoin was down 5.0 percent to around $29,700.

The decline was due to concerns about high inflation and rising interest rates. The world's largest cryptocurrency has lost about a fifth of its value so far this month.

The spectacular collapse of TerraUSD, the so-called stablecoin, has rattled an already tumbling crypto market amid a widespread sell-off of riskier investments.

TerraUSD, which lost its benchmark 1:1 against the dollar last week and is currently trading near 14 cents, according to pricing site coinecko, has drawn particular attention to stablecoins and the important role they play in the crypto system. Some of that attention has come from financial regulators.

French Central Bank Governor Francois Villeroy de Galhau told the conference, crypto assets can disrupt the international financial system if they are not regulated and made operable in a consistent and compliant manner across jurisdictions.

He points to stablecoins, which he says are somewhat misnamed, as one source of risk.

Speaking separately, Fabio Panetta, a member of the European Central Bank's executive board, also said Monday that stablecoins are vulnerable to run.

Tether, the world's largest stablecoin, briefly lost 1:1 on May 12, before recovering. Unlike TerraUSD, Tether is backed by reserves in traditional assets, according to its operating company.

On the same day, bitcoin fell to 25,400 US dollars, its lowest level since December 2020, but recovered to 31,400 US dollars on Sunday (15/5/2022).

Ether, the second-largest cryptocurrency, fell 5.6 percent to around $2,000 on Monday.

Regulators elsewhere are also concerned. The US Federal Reserve warned last week that stablecoins are vulnerable to investor moves because they are backed by assets that can lose value or become illiquid in times of market stress.