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This is the most destructive wealth event in the history of crypto, says The Block's Frank Chaparro - YouTube
Channel: CNBC Television
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and Tara coin isn't the only stable coin
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Under Pressure right now let's bring in
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Frank chaparro he's news director at the
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Block Frank what can you tell us is the
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latest today usdc tether I mean you know
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how do these pegs look
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yeah it's a great question we did see a
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bit of de-pegging in tether but I talked
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with the team Kelly and it seems like
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that they're managing redemptions quite
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well across different desks I have heard
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that there is pressure to get out of
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stable coins right now because they are
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worried about the risk
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um the risk sort of Illustrated in
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UST which really can't be understated
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right this event is probably and I
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tweeted this last night the most
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destructive wealth event in the history
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of crypto with probably about 50 billion
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dollars just wiped out so it's not
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surprising that investors are worried
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about tether and other stable coins at
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the moment and from there uh Bitcoin I
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mean look at shares of coinbase today
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they're down at last check about 27 so
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the entire ecosystem is it what kind of
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risk to the stable coin issue
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yeah well with coinbase right they have
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their own sort of specific issues the
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Street's really concerned about fee
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compression and the lack of volatility
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in the market so they probably would be
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suffering or under some degree of
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pressure even without the UST
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debacle but in terms of the broader
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stable coin Market I talked to tether
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and they said that they basically have
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um a ton of U.S treasury short term so
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would be pretty easy for them to honor
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several billion dollars worth of
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redemption
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UST is not in a similar boat right now I
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mean they're kind of struggling to get
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different whales in the market to do a
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capital infusion topping at least
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according to our reporting a billion
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dollars but at this point with
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UST down as much as it is and Luna the
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native token of Tara it's it's looking a
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bit Bleak but that isn't to say that it
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could happen
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um it's just a question of when it it
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was widely anticipated as well I mean
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last summer we spoke with Gary Gordon of
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Yale who had done that research on runs
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in the primary money market Financial
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system in 08 we talked to Caitlin Long
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who hated the leverage that was building
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up in the system and said that you know
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it was an unhealthy sign that was
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mimicking the bad behaviors from the
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traditional Financial system in 2008 so
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be that as it may it didn't change
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anything if anything these coins only
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became more popular where do we go from
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here
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well listen what do they say when the
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music is playing you've got to dance and
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that's exactly what has been happening
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over the past month with with folks
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pouring in to Anchor to get those juicy
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20 yields but once sort of it became
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apparent that
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that basically there was a lot of risk
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here people kind of ran for the exits as
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Kate alluded to where we go from here uh
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it's it's definitely a black eye on
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algorithmic stable coins it will be
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really tough for them to instill trust
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in the system uh at least for Luna
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specifically and the broader Terra
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ecosystem but right now Traders
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um I'm hearing from deaths are kind of
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de-risking and rotating into Bitcoin and
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eat there's a bit of a bid for Bitcoin
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and ether right now as you can see from
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the prices bitcoin's not down that much
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and I think even though a lot of funds
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have been caught flat-footed a lot of
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less crypto native funds aren't really
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that exposed to Luna it's it's a large
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market cap coin but kind of out there on
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the long tail relative to uh those two
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major Blue Chips if you will and I think
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that there will still be demand for
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Bitcoin and eth
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um
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irrespective of what's going on with
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with Luna and there's the price action
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Bitcoin is off the lows today it's back
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above 30 000 and hanging on amid all of
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the uh these deep sell-offs Frank thanks
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for now we'll let you go we appreciate
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it
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of course Frank chaparro with the block
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