Unlike Elon Musk purchasing $1.5 million in Bitcoin, Hal Finney receiving the first person-to-person transaction of 10 BTC, Satoshi producing a paper titled Bitcoin Whitepaper, or Elon Musk shilling Doge Coin on SNL, we have just experienced the wildest week in crypto history. We have never experienced a cascade of events like the one we just witnessed last week. We’ll find out what caused such instability in the crypto sector in the following days, but let’s look at the hottest trend that we saw this week.
LUNA’s Absolute Fall
LUNA reaches an all-time high of $119.55 before plummeting to zero a month later. Who could have predicted this terrific crash? No one, really. Everyone is taken aback by the disruption. Why would they not? It’s not something we come across every day. Terra’s coin LUNA was one of the top ten cryptocurrencies in the world just a week ago, and now it doesn’t worth a penny. One of the reasons it fell so quickly was that investors couldn’t see the reasons for the decline and began exiting.
One factor that contributed to the demise of LUNA was its sister coin, the greenback-pegged UST. Which dropped to 13 cents on Friday last week. The same thing happened with UST. When investors realized that 20 percent interest would not last, they began to leave because if there were more lenders than borrowers, the rate would fall by 1.5 percent each month. This massive drop in these two cryptocurrencies has impacted every coin in the top 100.
The Terra network was shut down twice last week to save investors from the death spiral caused by both coins, the UST and LUNA. Terra has been advised to stay alive for the time being by Lido, but the damage has already been done. Regardless, there would be enough ETH in the pool for investors to retrieve their coins if they chose to do so. Whatever the consequence, the crypto community would be talking about this crash for years to come.
Bitcoin & Altcoins
Last week, Bitcoin dropped 20% to $28,809, and Ethereum dropped 27% to $1,968. Some coins dropped by as much as 40% and 60%. The only cryptocurrency that survived the crash was ‘Maker,’ which increased by 7.1 percent. If the cryptocurrency market remains this volatile, this issue could quickly escalate; some experts have stated that a stable and regulated coin is required. Otherwise, the entire crypto-economic system could be jeopardized. A $1.23 trillion crypto market poses a significant risk to the US financial system. The crypto market would drown in this rapid growth if these coins cannot remain balanced.
After constantly dropping over the previous week, Terra may take some time to recover. Still, market analysts advise investors to remain cautious. Unless the token regains its former glory, it is difficult to benefit the investors.
Because of the growing volatility of the cryptocurrency space, it is in your best interest to stay updated on the industry. To remain relevant with advancements in the blockchain industry, make sure to visit BlockchainReporter daily.