Crypto crash: almost $1 trillion wiped off markets as Bitcoin hits lowest level since 2020

[midian182]

TL;DR: It's been a nightmare week for cryptocurrency holders as the market crashes and Bitcoin hits its lowest price since December 2020. Ethereum, BNB, XRP, and many other digital coins have also fallen to their lowest levels in a long time. The crisis came after stablecoin Terra, designed to trade 1:1 with the US dollar, collapsed.

TerraUSD (UST), the 11th largest cryptocurrency by market cap, is an algorithmic stablecoin that uses a set of smart contracts to ensure its value stays as close to $1 as possible. But after hovering at around $1 for about a year, it crashed to 29 cents yesterday, plunging its market cap from more than $45 billion to less than $5 billion. It has since rallied to 62 cents, but that's still far from $1.

Terra's support coin, Luna, has also plummeted in dramatic style, going from $86 at the start of the week to its current price of 20 cents. Terra is designed so traders can exchange 1 UST for $1 worth of Luna, no matter the price of UST

What's most shocking to me is not the death spiral, which was completely predictable, but the sheer number of intelligent people who bought the hype. Highly disappointing moment that should lead to some real self-reflection. https://t.co/xPrncOXzFI

— Jeremy Allaire (@jerallaire) May 11, 2022

Do Kwon, co-founder of Terra developer Terraform Labs, tweeted: "I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this."

Terra's collapse has impacted many cryptocurrencies, the most notable being the biggest one of all: Bitcoin. At the time of writing, BTC is at $27,236, its lowest value since before the crypto boom at the end of 2020. Bitcoin has now lost nearly two-thirds of its value since peaking at $69,000 in November 2021.

Ethereum is at $1,882, a level it hasn't seen since July last year. Dogecoin, Solana, Cardano, BNB, Polygon, and others have also seen their prices crash this week as panic spreads across the markets.

Bitcoin was touching $40,000 last week

While Terra's collapse is primarily why almost $1 trillion was wiped from the crypto market this week, other factors such as rising inflation and Russia's invasion of Ukraine have exacerbated the problem.

MarketWatch reports that Terra's fall could result in regulators placing more scrutiny on stablecoins. At a hearing on Tuesday before the Senate Banking Committee, Treasury Secretary Janet Yellen said that Terra's crash "simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that's appropriate."

The good news for non-crypto-owning gamers is that the freefall will doubtlessly make mining less profitable, and should push graphics card prices even closer to MSRP.

Permalink to story.

https://www.techspot.com/news/94562-crypto-crash-1-trillion-wiped-off-markets-bitcoin.html

 

[gamerk2]

The problem with Crypto remains the same: It is dependent on someone else purchasing it at a higher price in order to sustain itself. It's failed as a currency, and now only exists as a speculative asset, no more and no less.

The fact that Crypto has *not* held up against an economic downturn is another bad sign, given that "crypto is a safe asset against economic downturns" was one of it's major selling points.

 

[VaRmeNsI]

It's just returning to its intrinsic value: $0.

 

[Dimitriid]

The roaring 20ths but now in the 21st century share an awful lot of similarities with the 20th centuries roaring 20s: Market crashes (But now for tech bros instead of wall st bros...For now) world war tensions, syndicalism and the left picking up strength while Fascism slowly but surely also tries to consolidate power: we've got it all again...Not good.

 

[hahahanoobs]

If I can get a used RTX 3080 for $500 CAD I'll be happy!
It won't happen, but I can dream. lol

 

[winjer]

It's like a pyramid scheme or a Ponsi scheme.
When the amount of suckers at the bottom, willing to put in money in the machine, is drastically reduced, it starts to crumble.
Those at the top, that already were able to cash out, are the ones that get away with profit.

 

[R00sT3R]

Haha!

Get rich quick scum, getting poor even quicker...no sympathy whatsoever.

Crypto is the very definition of everything that's wrong with Capitalism in the 21st century.

 

[Uncle Al]

Yep ..... exactly as predicted. Guess Warren Buffet is looking a lot smarter now, eh?

 

[QuantumPhysics]

All of you guys in the chat are misinformed!!!

Cryptocurrency is our last greatest hope to break away from the central banks, the IMF and the racism plaguing the global markets.

Crypto is decentralized and no one controls it.

I can't get on a plane with $10,000 cash, but I can have millions in crypto and no onw knows.

I can make transactions without being tracked, harassed or oversight.

Bitcoin is changing the world and how we do everything.

Before ya'll insult crypto and blockchain technology, you really ought to know what you're talking about.

 

[QuantumPhysics]

It's like a pyramid scheme or a Ponsi scheme.
When the amount of suckers at the bottom, willing to put in money in the machine, is drastically reduced, it starts to crumble.
Those at the top, that already were able to cash out, are the ones that get away with profit.

"Ponzi" scheme after Charles Ponzi

 

[Achaios]

If this holds, kids might be able to get a GPU near MSRP in like 4 months from now.

 

[NumberSix]

I have some XRP and bought it for a bit of fun and if I lost it all it isn't the end of the world as I didn't buy enough to effect my life if it went belly up.

If you have gone all in though you want your bumps read.

 

[Mister_K]

The problem with Crypto remains the same: It is dependent on someone else purchasing it at a higher price in order to sustain itself. It's failed as a currency, and now only exists as a speculative asset, no more and no less.

The fact that Crypto has *not* held up against an economic downturn is another bad sign, given that "crypto is a safe asset against economic downturns" was one of it's major selling points.

It's no different than your 0s and 1s in your Bank Account. It's just not backed by Government.

Dollar, Pound, Crypto, Credits whatever it is, its the same.

Transferring large amounts, exchange rates between countries etc etc are not a concern with crypto.

Problem with crypto is lack of efficient way to sustain itself in terms of energy consumption. The other problem is, everyone and their nan wants to cash out back to Fiat, defeating the purpose of crypto.

 

[Mister_K]

Crypto is the very definition of everything that's wrong with Capitalism in the 21st century.

Sure, the real benefit of this crypto rush in the last decade has been blockchain. That there is the only benefit. Oh and those who actually did profit from it greatly.

 

[Theinsanegamer]

It's no different than your 0s and 1s in your Bank Account. It's just not backed by Government.

Dollar, Pound, Crypto, Credits whatever it is, its the same.

Transferring large amounts, exchange rates between countries etc etc are not a concern with crypto.

Problem with crypto is lack of efficient way to sustain itself in terms of energy consumption. The other problem is, everyone and their nan wants to cash out back to Fiat, defeating the purpose of crypto.

What purpose does crypto serve? The only thing it's really good for is moving money outside of established economic systems. It itself is not a good currency, something cryptobros hate being brought up.

The theorist would say the point of crypto is to move money into the pockets of the 5% who are upset that they were not the 1% in 2008

The optimist would say the crypto market was made by idealist tech nerds who think programmers can solve economic issues through enforced "rules", not understanding that rules being broken is a huge issue in any economic system and being on a computer does not change this.

The realist would see a market created as a hobby that has been coopted by wild west moneymakers who see an opportunity to scam the world's dumbest out of millions, and have done so for years with impunity. Recent crackdowns by law enforcement have lead tot he predictable: the market proped up as a greater fool scam got spooked and all the value is rushing out of useless digital assets.

 

[Toju Mikie]

From what I know, stablecoins usually rely on one or more coins to back the stablecoins. If the other coin or coins that is/are backing the stablecoins get too low, then the stablecoin will crash.

I think it's best for stablecoins to be connected to multi-coin and multi-chain topology for the best stability, but it has drawbacks. I think it would have helped in this case with LUNA though.

As for myself, I continue to HODL, but I've never invested much into cryptocurrency in the first place.

 

[emmzo]

Some crypto proponents are coming up with a new theory. Apparently, there's a big movement by bad actors to discredit the market. How delusional can these people get?

 

[RudyBob]

This is good news because fake stuff is inherently worthless

 

[godrilla]

Where are the expert trolls that were marketing a million dollar bitcoin? To be fair Precious metals are also down. Seems that crypto currencies are not immune to the Fed's hedge against inflation of increasing rates with a current pledge hike at 0.5 per month to 11% if not higher in a year or so.
Anyone else following potential world famine like conservative groups for past few months? ( We are already in a Baby formula shortage with 10 month outlook according to manufacturer)?

 

[Uncle Al]

All of you guys in the chat are misinformed!!!

Cryptocurrency is our last greatest hope to break away from the central banks, the IMF and the racism plaguing the global markets.

Crypto is decentralized and no one controls it.

I can't get on a plane with $10,000 cash, but I can have millions in crypto and no onw knows.

I can make transactions without being tracked, harassed or oversight.

Bitcoin is changing the world and how we do everything.

Before ya'll insult crypto and blockchain technology, you really ought to know what you're talking about.

You still haven't completed your homework assignment I have you last time. Go back and read the horror's of what this country went through BEFORE there was a central bank and once you understand you could walk into your bank and suddenly find it shuttered, all your money gone and no way to re-coop it or file suite against anyone then maybe you'll understand. The central bank is what stabilized the currency and prevented all these mysterious "money gone" episodes ..... want an example? Go invest that $10,000 into one of these internet invention scheme's that flease people's money for intentions that rarely ever are completed, much less make it to market .....

 

[gabelogan1324]

I just want a GPU at a good price - and ill trade crypto either way to make money - I dont care about why its there lol

 

[whateversa]

All of you guys in the chat are misinformed!!!

Cryptocurrency is our last greatest hope to break away from the central banks, the IMF and the racism plaguing the global markets.

Crypto is decentralized and no one controls it.

I can't get on a plane with $10,000 cash, but I can have millions in crypto and no onw knows.

I can make transactions without being tracked, harassed or oversight.

Bitcoin is changing the world and how we do everything.

Before ya'll insult crypto and blockchain technology, you really ought to know what you're talking about.

Actually you can be tracked on many crypto currencies and exchanges will have to comply with authorities - as they already do. Not everything is decentralized either.

 

[Theinsanegamer]

You still haven't completed your homework assignment I have you last time. Go back and read the horror's of what this country went through BEFORE there was a central bank and once you understand you could walk into your bank and suddenly find it shuttered, all your money gone and no way to re-coop it or file suite against anyone then maybe you'll understand. The central bank is what stabilized the currency and prevented all these mysterious "money gone" episodes ..... want an example? Go invest that $10,000 into one of these internet invention scheme's that flease people's money for intentions that rarely ever are completed, much less make it to market .....

I'm pretty sure he's trolling, that looks almost copy pasted form crypto discords, and Quantum has called crypto scams for years.

Then again this is quantum....

 

[Todd Sauve]

I learned about 25 years ago that the world of finance is 90% investor/peddler confidence, (read "hot air"), and about 10% fact. When Stephen Harper, an economist and the former prime minister of Canada, was asked in an interview how much of his portfolio was in cryptocurrency he said NONE! He said there is exactly NOTHING backing it up and it is intrinsically worthless. At least with a nation's currency you have the value of the country's resources and factories, and people, etc., acting as a backstop. With crypto there is literally nothing backing it up, so he does not invest one solitary nickle in it. That seems like a wise policy to me.

 

[Squid Surprise]

Wow... crypto has "crashed"... good thing that's never happened to "regular" currencies before... oh wait...

Everyone crying that crypto is now "over"... I suggest waiting a bit... just like everything else that "crashes", there will be a recovery. Terra might not recoup, but crypto itself will survive this.