Cryptocurrencies growing more correlated

Cryptocurrencies have dropped in lockstep with the broader stock market in recent days. Investors say that bitcoin and other digital assets fall alongside stocks has become more prominent in recent years as traditional money managers like hedge funds and family offices have entered the space. Such funds may be more likely to sell crypto holdings during periods of volatility rather than hold them.

Futures markets revealed that a recent stock market selloff might abate when trading opens Tuesday in New York. This could assist in alleviating some selling pressure from cryptocurrency markets.

The recent break of the dollar peg in the third-largest stablecoin by market value has also infiltrated volatility into the crypto ecosystem. The cryptocurrency TerraUSD, usually tied to a $1 discount, moved under that over the weekend following a series of large withdrawals from Anchor Protocol, a decentralized bank for crypto investors.

Binance temporarily suspending withdrawals

Sales of ether and bitcoin to safeguard TerraUSD’s value have also weighed on the prices of the two largest cryptocurrencies. TerraUSD’s decoupling from $1 looks doubtful to resolve soon, investors say, as many sell orders are still awaiting processing.

Binance, the world’s biggest cryptocurrency exchange by volume, said Tuesday it had temporarily stopped withdrawals for TerraUSD and Luna tokens, another cryptocurrency used to maintain TerraUSD’s peg, due to a high volume of pending withdrawal transactions generated by network congestion. It later continued those transactions.

TerraUSD’s value dropped as low as $0.61 over the past 24 hours, as stated by CoinDesk, before rebounding to trade at $0.89 at 6 am ET Tuesday. Luna, the sister cryptocurrency of TerraUSD, traded at $28.55 on Tuesday, having lost half its value from 24 hours prior, as stated by CoinDesk.