Cryptocurrency Crash: What’s happening in the cryptocurrency market?

• Image Credit: Internet

• May 12, 2022 | Dhupali Das

Bitcoin has lost approximately 28% of its value in the previous seven days. 

Digital Desk: The worldwide cryptocurrency market appears to collapse rapidly, with numerous popular tokens hitting new lows. In the last 48 hours, the list of top cryptos by market cap has shifted dramatically.

Terra (LUNA), one of the top cryptos just a few days ago, has plunged to 59th place on CoinMarketCap, losing over 99 per cent of its value in the last seven days. Its price has dropped by nearly 96 per cent in the previous 24 hours alone.

Bitcoin has lost approximately 28% of its value in the previous seven days. BTC was just $28,542 at the time of press. Moreover, the TerraUSD (UST) price, which is the driving force behind the current crypto market crisis, has fallen by 32% in the last week. The price of UST has decreased by approximately 18% in the previous 24 hours, to $0.6782.

Here are some of the most important developments and updates from the crypto markets: 

1. In the last 24 hours, BTC has plummeted 9% while ETH has dropped by 15%, and altcoins like LUNA have dropped almost 90%. Despite a modest recovery that brought BTC back above $32,000, widespread overhead selling pressure and severe panic in the market drove the price below $28,511.

2. “Data howed that the rate of BTC exchange inflow remained relatively high in the last couple of days. When investors decide to sell, they frequently transfer their holdings to exchanges,” Darshan Bathija, CO founder & CEO of Vauld, told FE Online.

3. Luna fell below $1, and UST, one of the blockchain’s stablecoins, again lost its peg. In addition, in the last few days, the entire value locked on Anchor (Terra’s largest DeFi protocol) has dropped by $11 billion. 

4. After losing its peg to the dollar, Terra’s algorithmic stablecoin UST fell to roughly $0.30. 

5. Edul Patel CEO & Co-founder of Mudrex said that Bitcoin had hit a new low of US$28,000 in the last 24 hours, the lowest since 2020. “BTC appears to be oversold, with selling pressure intensifying. BTC has been battling to find support between US$27,000 and US$30,000 since yesterday. It’s also possible that BTC will go below its present price. The collapse of UST has had a significant impact on the crypto market, in addition to macroeconomic issues. Cryptocurrencies may take some time to recover from this crash.” he said. 

6. Most stable currencies, such as Tether and USDC, are backed by assets such as cash and bonds. In the case of algorithmic stablecoins, such as UST, they are designed to be automatically tied to the price of another digital currency asset, according to Bathija. “One UST is worth exactly $1 in Luna when redeemed or coined. In order to maintain the stable coin’s peg, the Luna Foundation Guard (LFG), a non-profit foundation founded to protect the Terra Ecosystem, purchased numerous cryptocurrencies, including Bitcoin,” he stated. 

7. Earlier, when BTC plummeted to $30,000 earlier this week, LFG’s reserves ratio to UST issued fell, compelling the company to liquidate its BTC reserves. “Not only is the impact of this shift being felt in the market, but regulators are also concerned. US Treasury Secretary Janet Yellen used the UST issue to call for stablecoin regulation,” Bathija stated.