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More than $200 billion erased from entire crypto market in a day as sell-off intensifies

The price of bitcoin plunged below $26,000 on Thursday, hitting its lowest level in 16 months.
Ether, the second-biggest digital currency, tanked below $2,000 per coin.
The collapse of stablecoin terraUSD has led to fears of a broader market contagion.

Bitcoin fell below $26,000 for the first time in 16 months, amid a broader sell-off in cryptocurrencies that erased more than $200 billion from the entire market in a single day.

The price of bitcoin plunged as low as $25,401.29 on Thursday, according to Coin Metrics. That marks the first time the cryptocurrency has sunk below the $27,000 level since Dec. 26, 2020.

Bitcoin has since pared its losses and was last trading at $28,569.25, down 2.9%.

Ether, the second-biggest digital currency, tanked to as low as $1,704.05 per coin. It’s the first time the token has fallen beneath the $2,000 mark since June 2021. Ether was last down 8.8% at a price of $1,937.88.

Investors are fleeing from cryptocurrencies at a time when stock markets have plunged from the highs of the coronavirus pandemic on fears over soaring prices and a deteriorating economic outlook. U.S. inflation data out Wednesday showed prices for goods and services jumping 8.3% in April, higher than expected by analysts and close to the highest level in 40 years.

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Regulators are growing anxious about stablecoins after Terra’s stunning collapse

TerraUSD, an “algorithmic” stablecoin that’s meant to be pegged one-to-one with the dollar, plunged below $1 this week.
Tether, the world’s biggest stablecoin, also temporarily “broke the buck” on Thursday.
U.S. Treasury Secretary Janet Yellen has urged Congress to approve federal regulation of stablecoins.

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Regulators are getting increasingly worried about stablecoins after the collapse of controversial cryptocurrency venture Terra.

TerraUSD, an “algorithmic” stablecoin that’s meant to be pegged one-to-one with the U.S. dollar, has erased much of its value this week after a stunning run on the bank that saw billions of dollars suddenly evaporate from its market value.

Also known as UST, the cryptocurrency operated using a complex mechanism of code combined with a floating token called luna to balance supply and demand and stabilize prices, as well as a multibillion-dollar pile of bitcoin.

Tether, the world’s biggest stablecoin, also slipped below its intended $1 for several hours on Thursday, fueling fears of a possible contagion from the fallout of UST de-pegging. Unlike UST, tether is supposed to be backed by sufficient assets held in a reserve.

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