The past week has been very hectic for the world of cryptocurrencies† Hectic is a bit of an understatement even for crypto with the complete crash of terra (LUNA). In this article you can read about the most important events in the crypto world of the past week.
1 – TerraUSD (UST) and LUNA . Crash
The collapse of the Terra stablecoin ecosystem was without a doubt the biggest and most significant event last week. Terra was no longer able to monitor the link between UST and the US dollar (USD). This ‘peg’ in jargon has therefore been abandoned. That caused a sharp drop in value to just a dollar cent or five, while the token should actually be worth exactly 1 USD.
Not only has the UST stablecoin fallen almost to zero, the LUNA token, which supports the ecosystem, has also fallen. dropped by more than 99%. Trading of LUNA and UST was stopped in many places, but several platforms have now made trading possible again, including Bitvavo.
You can read more about the situation below.
2 – Exchanges see inflows, bitcoin falls again
Yet crypto still appears to be in a bear market. Exchanges were again subject to significant net inflows. The fear in the market is palpable and is even starting to get extreme. In addition, the prices of most tokens are starting to look like waterfalls. A good comparison with now is March of 2020. Then the market also fell sharply, but also recovered quickly. We may now see this scenario repeating again.
3 – Janet Yellen remains positive on crypto
Crypto is on the brink, so are all other financial markets. Pseudo-dollars have even plummeted in value. You would think that politicians see their chance to completely raze the world of digital assets, but the opposite happened. Janet Yellen, on the other hand, remained quite sober. She said more or less “this is what can happen if the regulation is not right, watch your money.”
That means there is more pressure for governments to come up with meaningful regulations for the crypto market. Good for investors and good for confidence in the government, as long as it is not overdone of course.
4 – Madness at Coinbase
If you’re into the policy of centralized exchanges, you’ve probably been sweating extra hard this week. News went around that small investors would see little of their money back if Coinbase went bankrupt. This turned out to be wrong, all your tokens are safe on Coinbase, should the company go bankrupt. The pronounciation “not your keys, not your coins” of course still applies. For example, a platform can also be hacked and then you can just lose everything.
5 – Unstable Tether (USDT)
After UST and LUNA fell, Tether (USDT) also became unstable. Presumably, the UST panic has also caused the necessary liquidations at USDT, which also failed to maintain that peg.
Tether itself claims that nothing was wrong and that the link remains. Still, confidence in the stablecoin was briefly tested.
Warren Buffet once said: “when it gets low, you can see who is swimming naked.” Should the financial uncertainty remain like this for a while, you will see that people and companies left and right are unable to survive financially. We keep our pants up.
