Today, as a result of record sell-offs in the crypto market, Bitcoin hit a new local bottom at $20,852, which prompted even over-optimistic hodlers to liquidate their digital assets in crypto-gold. One of the landmark events was the sale of a part of MicroStrategy’s Bitcoin reserve in the amount of $103 million via a margin call, which took place after the price of the flagship dropped below $21,000. According to company representatives, this was done to increase the liquidity of assets, but some data still point to panic among shareholders. Recall that yesterday, the CEO of MicroStrategy, Michael Saylor, stated that he was not going to liquidate the company's reserves, since BTC falling below 21,000 is extremely unlikely. At the moment, the Bitcoin fund of the largest crypto hodler is approximately $3 billion, while the average value of coins purchased by MicroStrategy fluctuates around $30,700. It seems that Sailor's strategy, which consisted of buying BTC at local highs, was not very effective. In times of crisis, with growing pressure from sellers, foreign exchange assets are usually withdrawn from crypto to invest in stable exchange assets, such as commodities or securities. And in this circle of diversification, cryptocurrency still does not occupy a leading position.
The first country to introduce Bitcoin as legal tender suffered a loss of about $40 million amid the cryptocurrency market crash, as the average country purchase price of BTC coins is $45,171, and the current value of the token is hovering around $22,000. In September last year, the President of El Salvador, Nayib Bukele, purchased Bitcoins for the first time with public funds. Since then, crypto purchases have been made regularly, resulting in about 2,300 BTC in the country's budget. At a cost of $45,171 per coin, they amounted to about $103 million, but now El Salvador's Bitcoin reserve has decreased to about $50.6 million. Earlier this year, the El Salvadoran government postponed a planned $1 billion Bitcoin bond issue, citing unfavorable market conditions. The securities were to be used to finance the mining of BTC using volcanic energy and the repayment of the country's sovereign debt. Now the authorities of the country say that the issuance of Bitcoin bonds will begin no earlier than September 2022. However, the International Monetary Fund and a number of other international financial bodies are still strongly recommending that the El Salvadoran government reconsider its decision to use Bitcoin as legal tender.
Algorithmic stablecoin TRON USDD continues to lose its peg to the dollar for 15 hours and is currently trading at $0.9787, having slightly recovered from the low at $97.71. Problems with the coin due to the fall in the capitalization of the crypto market began yesterday, just 40 days after the official launch of USDD. The founder of TRON, Justin Sun, tweeted that the company has allocated $2 billion to equalize the price of the stablecoin, but this has not yet yielded results. USDD uses an algorithmic mechanism to maintain its peg to the US dollar. When a stablecoin trades below $1, arbitrageurs can liquidate it for $1 dollar of their own TRX cryptocurrency. Conversely, when USDD is trading above $1, arbitrageurs can exchange $1 in TRX for one USDD, minting more USDD in the process and increasing its supply. But arbitrageurs who are trying to profit by exchanging their TRX for $1 are creating huge selling pressure in the cryptocurrency ecosystem. So since USDD started to lose its peg, TRX has fallen 16.7%. And this pattern is almost identical to the infamous LUNA and UST pair that collapsed in May. Should we wait for a TRON restart? Wait and see.