The cryptocurrency world has crashed this week. Since Monday, May 9, the price of Bitcoin has fallen to $26,000, ether has lost 30% of its value and the stablecoin TerraUSD has completely imploded. In total, it is nearly 300 billion dollars in losses to be deplored following this crash.
Terra and TerraUSD have stopped running
TerraUSD is an algorithmic stablecoin. Unlike the dollar-backed USDC and USDT, this stablecoin is backed by another crypto, Terra also known as Luna. Thursday, May 12, the TerraUSD lost almost 99.8% of its value. The price of these digital currencies eventually stabilized at $0.00002 for Terra and $0.09 for TerraUSD. The developers behind these cryptocurrencies have decided to suspend the creation of new tokens “to protect themselves from an attack”.
The change at the head of the American antitrust authority which will scare GAFAM
The Terra blockchain has officially halted at block 7607789.
Terra Validators have halted the network to come up with a plan to reconstitute it.
More updates to come.
— Terra (UST) ? Powered by LUNA ? (@terra_money) May 13, 2022
Stablecoins are thought to bring a semblance of stability to the highly volatile cryptocurrency market. The loss in value of Terra since the weekend has brought with it the fall of its stablecoin. From then on, the more the value of the TerraUSD moved away from the dollar, the more the confidence of the investors towards the stablecoin dissipated, causing a snowball effect.
Other stablecoins were also affected by the sudden drop in TerraUSD. This is the case of Tether, the most popular stablecoin considered a mainstay of cryptocurrency trading, fell to $0.95 before returning to its original parity of $1.
Consequent repercussions
This financial earthquake is part of a global context of instability. Bitcoin fell below the $26,000 mark on Thursday for the first time since 2020. This represents a 60% drop in value from November when its price peaked at $67,000. Dan Dolev, an analyst dealing with cryptocurrency and fintech companies at the Mizuho Group, tells the New York Times whate Bitcoin will continue to work as long as no one loses money “. A survey by the Mizuho group estimates this point of no return at $21,000.
Ether also recorded a 30% drop in value during the week, like other digital currencies such as Solana or Dogecoin. Many more people are impacted by the financial roller coaster of cryptocurrency. Now, in the United States, nearly 16% of the population owns cryptocurrency compared to 1% in 2015.
This textbook case shows just how volatile the cryptocurrency market is and how quickly millions of dollars in digital assets can turn into just a few hundred dollars. Janet Yellen, the Secretary of the United States Treasury, spoke about the situation and believes that she has ” really need a regulatory framework” for this sector before concluding that “Over the past two days, we have had a concrete demonstration of the risks. »