Crypto Crash: Nearly $1 Trillion Markets Destroyed As Bitcoin Hits Lows Since 2020

TL;DR: It has 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 level 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 capitalization, is an algorithmic stablecoin that uses a series of smart contracts to ensure its value stays as close to $1 as possible. But after hovering around $1 for about a year, it crashed to 29 cents yesterday, dropping its market cap from over $45 billion to less than $5 billion. It has since risen to 62 cents, but that’s still far from $1.

Terra’s support coin, Luna, has also plummeted dramatically, from $86 at the start of the week to its current price of 20 cents. Terra is designed in such a way that traders can exchange 1 UST for $1 worth of Luna regardless of the price of UST

Do Kwon, co-founder of Terra developer Terraform Labs, tweeted: “I understand that the past 72 hours have been extremely tough for all of you – know that I am determined to work with all of you to get through this crisis, and we’ll build our way out of this.”

The collapse of Terra has impacted many cryptocurrencies, the most notable of which is the largest: 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 its peak of $69,000 in November 2021.

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

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

MarketWatch reports that Terra’s fall could lead to increased regulatory oversight of stablecoins. In a hearing on Tuesday before the Senate Banking Committee, Treasury Secretary Janet Yellen said Terra’s crash “simply illustrates that this is a fast-growing product and there are risks to financial stability and we need an appropriate framework.” .”

The good news for gamers who don’t own crypto is that the free fall will undoubtedly make mining less profitable and should push the prices of graphics cards even closer to the MSRP.

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