Bitcoin fell below $30,000 on Tuesday, for the first time since July 2021. In an increasingly risk-off environment amid aggressive monetary tightening and rampaging inflation, the cryptocurrency has dropped over 50% from its all-time high of almost $69,000 in November 2021. A large part of the sharp dip can also be attributed to UST threatening to unravel. UST is the USD stablecoin that lives on the Terra blockchain and has since sunk below $0.30 at the time of writing, far from its intended 1-to-1 peg to the US dollar. The Luna Foundation Guard, the organisation that supports Terra, is sitting on billions worth of Bitcoin that investors worry might be sold. Bitcoin is not alone in the crypto slump as the market gets skittish about the volatile digital assets. Ethereum was trading near $2200 before recovering to $2391 – also less than half its all-time high of over $4800. Macroeconomic uncertainty has plagued the wider market, with the stock market also facing plenty of risk-off rotations.
The House Passes $40 Billion Aid Package for Ukraine
The US House of Representatives has just voted to provide $40 billion in new aid to Ukraine as the Russia-Ukraine war drags on. The largely bipartisan vote saw a 387-57 turnout in favour of the package, which will now move to the Senate, which has said that it will “move swiftly” to get the measure passed and sent to the president’s desk. The additional aid to Ukraine has been decoupled from a pandemic response package to hasten its passing; although this likely adds more challenges in passing the $10 billion covid relief bill.
Russia Imposes Sanctions on Natural Gas
In response to the ever-increasing number of sanctions imposed on it, Russia has imposed sanctions on over 30 energy companies in the EU, US, and Asia. Most of the sanctions have been slapped on Gazprom’s overseas units, including Gazprom Germania. The sanctions also include EuRoPol Gaz, the owner of the Polish part of the Yamal-Europe pipeline that carries Russian gas to Europe. Europe is heavily reliant on Russian gas, getting 40% of its supply from the country. Germany, Europe’s largest economy, is also Russia’s largest European customer, with over 50% of its gas needs coming from there. Adding to the supply disruption is Ukraine blocking a pipeline that delivers Russian gas to Europe, citing its first instance of force majeure and citing the Russian invasion as the reason for the disruption.