Digital asset market slump results in crypto equivalent of Fed's quantitative tightening, analyst says

Morgan Stanley analyst Sheena Shah said Tuesday that ongoing weakness in crypto prices, failure of a dollar stablecoin and deleveraging in decentralized finance ("DeFi") is resulting in the crypto equivalent of the Federal Reserve's quantitative tightening policy. Major cryptos like bitcoin (BTC-USD) -37% and ethereum (ETH-USD) -54% have been cratering YTD, as speculators become more risk averse as developed central banks tighten monetary policy to fight off inflationary pressures. The widespread slump in crypto prices were exacerbated after the meltdown of algorithmic stablecoin TerraUST (UST-USD) and its sister token Luna (LUNA-USD), wiping out billions in value. The famed Terra collapse had caused some to question the stability of Tether (USDT-USD), which is the most heavily traded digital asset on a daily basis, after it recently lost its peg to the U.S. dollar, Shah wrote in a note. Meanwhile, investors are redeeming Tether (USDT-USD) at a record pace, with $10.6B of redemptions occurring over the