Crypto contagion sparked by Terra collapse could be coming to an end, Citi says

Cryptocurrency contagion triggered by the collapse of algorithmic stablecoin TerraUST (UST-USD) in May has likely peaked as signs of some liquidity stress may have passed, Citi analyst Joseph Ayoub wrote in a note to clients Thursday. Looking at the price of staked ethereum (ETH-USD), otherwise known as stETH, it's previously substantial discount to ether (dropping to as low as 0.8000 stETH/ETH earlier in 2022) has narrowed closer to parity in a move that implies "the acute deleveraging phase has now finished," Ayoub explained. That liquidity preference has coincided with ether's (ETH-USD) 33.5% jump over the past month. Celsius, the formerly prominent crypto lender that filed for bankruptcy in mid-July, held more than 410K stETH, "which appeared to cause speculative sales on fears of a liquidation into a relatively illiquid market," Ayoub noted, adding that "this moved the stETH price further away from par."stETH is a token that represents one unit of ether (ETH-USD) that has been locked up to support the blockchain's upgraded network, a.k.a the beacon chain. Users typically use stETH to earn rewards -- similar to an IOU. Furthermore, the contagion effects into broader financial markets is unlikely given cryptos' relatively small market value, Ayoub wrote. The global crypto market cap recently stood at $1.03T vs. its November peak of $3T. That's tiny when compared with the U.S. equity market at $34T. "We believe most mainstre...