Bitcoin's most stable coin has decreased significantly after reaching a peak of $67,000 in November 2021.
Although digital currencies do not follow stock market movements, analysts believe that this dip is normal for the currency's cycles.It also comes as markets react to the new inflation figures from the United States.
According to Coin Metrics, the price of bitcoin fell to $25,401.29 on Thursday. It's the first time the cryptocurrency has dropped below $27,000 since December 26, 2020.
Investors are leaving cryptocurrencies at a time when stock markets have plummeted from the coronavirus pandemic's highs due to concerns about price inflation.
The TerraUSD, or UST, is designed to reflect the dollar's worth. However, it fell to less than 30 cents on Wednesday, causing investors to lose faith in so-called decentralised finance.
Luna, another Terra token with a floating price that is supposed to cushion UST price shocks, has lost 99 percent of its value.
Terra inventor Do Kwon's Luna Foundation Guard has created a multibillion-dollar bitcoin stash to assist sustain UST in times of need.
To help its ailing stablecoin, Foundation Guard sells a big amount of its bitcoin assets. That's a dangerous bet, not least since bitcoin is a very volatile asset.
Economists have long feared that tether may not have the required amount of reserves to bolster its dollar peg in the event of mass withdrawals.