Crypto Espresso: There’s an unstable coin contagion in today’s quick shot of the latest crypto news
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Morning, The Coinheads.
Bitcoin is dancing on the edge of a razor – on the precipice of an abyss – some crypto analysts suggest – tripping below below $26,000 for the first time in 16 months, has others tripping out.
The cryptocurrency has lost more than 50 per cent of its value over the last six months amid a broader market slide accelerated by the adventures of (un) stablecains which has erased some $1.5 trillion from the entire crypto market.
That ongoing sell-off has now stripped cryptocurrencies of well over $200 billion of value in a single day.
Dark times, but as my genius half-French tween likes to say: ‘Igne natura renovatur integra!’
It’s Friday in Cryptoland and we’ve already begun:
Coin Metrics says Bitcoin has since pared its losses and was last trading at $28,569.25, down 3%. That marks the first time the cryptocurrency has sunk below the $27,000 level since Dec. 26, 2020.
Ether, the second-biggest digital currency, dove, dolphin-like to $1,704.05 per coin. It’s the first time that token has wandered below the $2,000 mark since June 2021. Ether was last down circa 9% at a price of $1,937.88.
Overnight, Binance, one of the world’s largest cryptocurrency exchanges, put up a red – or possibly white – flag for the Terra network. Binance told investors that the blockchain associated with the Terra (LUNA) luna token, is “experiencing slowness and congestion.”
As a result, Binance reported a “high volume of pending Terra network withdrawal transactions” on its exchange – a clear pick-a-colour flag that investors are rushing to sell whatever luna they have.
It’s a terribly difficult number to comprehend. Luna’s price has evaporated from around US$85 a week ago to trade at around 4 cents overnight, according to data from Coin Metrics, making the crypto’s currency looking pretty worthless.
The problem here is that unlike its stable of rival stablecoins – think Tether (we’ll get to Tether) and USD Coin – Luna’s headline bro, TerraUSD (UST) is not backed by any “real-assets.” Real world assets is probably accurater. Like bonds and such.
Instead, the Luna Foundation Guard, a non-profit created by Terra’s founder Do Kwon, is holding about US$3.5 bn of BTC in reserve.
Its peg has been cast asunder and the teamsters are dumping luna like a total eclipse of the chart.
UST isn’t doing its thing ie: it’s should be a mirror the value of the USD. But it has taken an express elevator to lows of less than 30 cents, and that’s given investor confidence in the potential of the decentralised finance space and even The Blockchain itself a real shake.
Terra, which ranked among the top 10 most valuable cryptocurrencies a few weeks back, peaking just shy of $120 last month, has put something of a contagion in the air, with other coins also showing concerning symptoms.
Analysts at GlobalBlock have said a capitulation in the price of the Tether stablecoin would be crypto’s “Lehman Brothers moment.”
Trading in the wake of the Terra’s collapse, the $81 billion Tether stablecoin also began to become – hate to say it, untethered from its USD $1 peg.
“I am optimistic that (Terra’s) fall would not be that catastrophic — a collapse of Tether would be though,” GlobalBlock said – a little prophetically, possibly ironically – in an earlier note.