Acala stablecoin collapses, altcoin prices dip

Acala stablecoin collapses, altcoin prices dip

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The Acala stablecoin collapsed and investors decided to show no mercy for the Celsius Network coin on Monday. – Photo: Shutterstock

Altcoin prices dipped Monday after the Acala stablecoin (ACA) collapsed due to a hack and investors decided to show no mercy for the Celsius Network’s beleaguered token.

ACA is the native cryptocurrency of the Acala Network, a decentralized finance (DeFi) hub that operates on the Polkado (DOT) blockchain. On Sunday, hackers capitalized on a bug in a liquidity pool to mint about 1.3bn ACA, the Acala Network said in a tweet. ACA – also known as aUSD – nosedived as it lost its peg to the US dollar.

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Transfers frozen

The Acala Network froze ACA transfers and swaps. The network indicated on Twitter that it recovered some of the extra minted coins and proposed to burn them, pending community members’ approval.

The Acala hack came about two week after hackers drained about $190m from the Nomad Bridge was breached.

While Acala was attempting to sort out its difficulties, the Celsius Network coin (CEL) sank 23% shortly before conventional markets closed in North America. (All figures based on CoinMarketCap data.)

CEL has experienced extreme volatility since the Celsius Network collapsed, and fellow crypto lender Voyager Digital and hedge fund operator Three Arrows Capital. All three companies filed for bankruptcy protection after being hammered by the collapses of the original luna coin and related terraUSD stablecoin.

But Monday’s crypto price declines were relatively modest as most drop were less than 6%. Chiliz (CHZ) and stepn (GMT) bucked the downward trend by rising 13% and 10% respectively.


Bitcoin in $24,000 range

Bitcoin (BTC) returned to the $24,000 range after briefly surpassing $25,000 on the weekend.

Ether (ETH), the primary coin of the Ethereum blockchain, was back trading around $1,900 after getting above $2,000 and reaching a three-month high. Ether has gained recently amid hype about Ethereum’s upcoming hard fork, known as the Merge.

Following the Merge, ether will be produced through the proof-of-staking (PoS) mechanism, rather than the current proof-of-work (PoW), which is more expensive and energy-intensive.


Confidence in Merge growing

“The growing confidence in the completion of [Ethereum’s] shift from PoW to PoS is clearly supporting ETH prices,” Bitfinex analysts told on Monday.

The analysts said ETH’s bullish momentum is continuing as investors remain optimistic about the Merge.

“Bitcoin and the wider digital token economy remains in the green as a mood of summer optimism seemingly engulfs the space,” said the analysts.



Whale becomes active again

The analysts said a whale crypto wallet on Ethereum has become active again after being dormant for three years. The whale, or large investor, behind the wallet transferred 145,000 ETH to multiple wallets in batches of 5,000 ETH and 10,000 ETH after the coin surpassed $2,000.

“This move could enable the whale to stake its ETH in order to grow and become a validator on the PoS community and generate passive revenue,” said the Bitfinex analysts. “Additionally, we also believe that the move signals support for the Merge.”

The crypto sector’s market cap exceeded $1.5trn (£1.24trn) on Monday while trading volume rose above $78bn. The gains could be attributed to lower US inflation as well as the investor optimism, said the Bitfinex analysts.


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