The value of the bitcoin it dropped below $ 30,000 for the first time this week. This is the minimum even from June 2021. The higher-than-expected April inflation data added new pressures on cryptocurrencies, already under stress from the free fall of moon and UST, the two cryptocurrencies of the blockchain platform Land. The second is also in sharp decline cryptocurrency by market value, or Ethereum, which is worth about $ 2,350, down by 7.5%.
TerraUSD, or UST, decentralized and algorithmic stablecoin, lost its peg to the US dollar last weekend and plummeted to 26 cents this morning. Luna, which had recently exceeded $ 114, is now worth $ 4.77 after falling below one dollar.
Bitcoin in free fall: that’s why they no longer pull cryptocurrencies
Luna, what happened
This morning -33%, -85% in the last 24 hours, -95% in the last week at the value of Luna and all the wallets that have invested. The stablecoin of the Terra group (UST) collapsed in the same way: -60% within 1 day, -46% in the morning alone, plunging to 0.3 dollars and therefore far from parity. Last April 5 Luna was worth 119 dollars, today it is worth 5 and 2 years ago it was worth 0.12.
Stablecoins are usually backed by a reserve asset, for example the dollar, in the case of Tether (USDT) and USD Coin (USDC), just to name the two most important. The FSO, on the other hand, does not foresee reserves, but maintains (maintained) its 1: 1 ratio with the dollar thanks to Luna, its governance token. To create more FSO, it has to burn moonand viceversa.
Do Kwon, the man who created Terra, then decided to support UST’s “peg” also with bitcoin. The resulting sell off of bitcoin to buy back UST has had a disastrous ripple effect for the cryptocurrency market as the price of bitcoin has also fallen. Just a few days ago, TerraUSD was among the 10 largest cryptocurrencies by market capitalization. Yesterday, US Treasury Secretary Janet Yellen also mentioned TerraUSD de-pegging during a Senate hearing: “Stablecoins pose risks to financial stability and need to be regulated.” On Wall Street, meanwhile, the stock of Coinbase, the first cryptocurrency trading platform in the United States, loses 22%, also due to a disappointing quarterly report.
The collapse of bitcoins
TerraUSD burns 70% of its value in 24 hours and sinks crypto finance, bringing doubts about its sustainability back to the fore. Bitcoin pays a steep price, falling below $ 29,000, its lowest since January 2021. The algorithmic stablecoin, dear to many investors and considered an experiment that combines mathematics and software to create a digital currency that behaves like the dollar collapsed for reasons that are not yet clear, falling to 23 cents, a far cry from the value of 1 dollar to which it should be pegged. “I understand the past 72 hours have been difficult for all of you. Know that I am determined to work with each of you to navigate the crisis, ”says Do Kwon, the South Korean developer who created the stablecoin and who is now having a hard time gaining the trust of big investors.
The thud comes at a time of market nervousness and unleashes a pussy from cryptocurrencies, which is also the accomplice of Coinbase’s disappointing quarterly report. The largest cryptocurrency exchange platform in the United States closed the first quarter below analysts’ expectations due to a drop in users. Losses amounted to $ 429.7 million on revenues of $ 1.2 billion. What is even more worrying, however, is the communication to the Sec of the company specifying that users of crypto assets have no protection in the event of bankruptcy. In itself there is nothing new given that the lack of safeguards is provided for by the current regulations but just having certified it in writing has triggered panic, suggesting that the clarification was linked to a real risk of bankruptcy for the company. “There is no risk of bankruptcy but we have included a new risk factor based on the requirements of the SEC,” says CEO Brian Armstrong is quick to explain. his words, however, do not reassure and Coinbase shares closed down by 26.40%. Bitcoin is also heavy, losing 8.7% at $ 28,300. the cryptocurrency has been in decline for several sessions now and has burned more than 50% of its value compared to last year’s peak.
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