Crypto Espresso: It’s sheer Terra in today’s quick shot of the latest crypto moves and news
It’s supposed to rep one US dollar, so TerraUSD, (UST), shag-assing to 26 cents, is not a win.
UST’s supposedly ultra-grounded sister token Luna has shed circa 95% of its value in the past seven days.
Bitcoin is down, as is Ethereum.
It’s Thursday in Cryptoland. Let us begin.
Cryptocurrency blue-chip tokens – Bitcoin and Ether – endured wild swings throughout a tempestuous day as traders gasped at UST’s descent and then grappled with worse-than-expected April US inflation data.
Bitcoin dropped below the US$30,000 mark for the second time this week after new inflation data shows consumer prices remain at 40-year highs.
BTC is down 7% at US$29,135.00, according to Coin Metrics.
Earlier in the day the coin dropped as low as US$29,026.66, its weakest point since December 2020.
According to CNBC, Ether fell 10% to US$2,104.15.
Cryptocurrencies fell with stocks after the Bureau of Labor Stats reported CPI of 8.3% outpacing the fears of economists polled by Dow Jones.
That also really spooked investors, leading to a rush for the risk asset exit doors, including the ones with ‘crypto panic’ written in large letters on the wall and a picture of a stickman freaking out.
Cryptocurrencies remain tightly correlated to the S&P500 and more recently, a more pronounced tie to the Nasdaq Composite.
UST is a so-called stablecoin – so that baby’s meant to hold tight and not go wandering off on its $1 peg. Overnight it touched 26 cents (Wednesday, US time).
In late trading, TerraUSD has bounced to around 66 cents, according to Coin Metrics.
Created by Singapore-founded Terraform Labs about three years ago, UST is what the kids are calling an algorithmic stablecoin. Part of the Terra blockchain project, it’s full of math and is meant to follow the value of the dollar, like more famed names as Tether and USDC.
Buuuut, unlike with those cryptocurrencies, Terra doesn’t have cash and other assets held in a reserve to back its token. Noo. Instead, it uses a complex mix of mathy-code — as well as relying on its totally reliable sister token Luna — to stabilise prices.
Terra’s erstwhile sister token luna, which has a floating price and is meant to serve as a kind of shock absorber for UST, at one point dived to less than US 90 cents before recovering to $1.18.
The coin has lost roughly 96% of its value in the past seven days, and now has a smaller market value than its stablecoin counterpart.
The coins of crypto are deep in the colour of blood today; we’d better go through those who’ve suffered the most outside (sheer) Terra.
The cryptocurrency market is down 11% over the past 24 hours. Avalanche, ApeCoin, Shiba Inu, and Solana are among the coins and tokens that have experienced major losses in the past day.
Avalanche (AVAX) is down 34% to just below $32, per data from CoinMarketCap.
It fell to below $28 its lowest ebb August last year…
And poor Solana (SOL). She’s down 26% in the past 24 hours according to decrypto.co, dropping to about $52 a few hours ago.
She fell below $50 earlier tonight, also for the first time since last August.
Yahoo says US regulators, already skeptical of crypto, are doubling down on their stance as the digital asset markets plunge this week. US Securities and Exchange Commission chair Gary Gensler made his concerns clear in an interview with Bloomberg on Tuesday, calling out crypto exchanges for offering multiple services that are often in conflict with one another, such as custody, market-making, and trading.
“Crypto’s got a lot of those challenges– of platforms trading ahead of their customers. In fact, they’re trading against their customers often because they’re market-marking against their customers,” Gensler said.