This week saw the demise of the Terra ecosystem as UST lost its peg and LUNA collapsed to virtually zero. The entire market is down some $500 billion.
This was the most eventful week in many months, but, unfortunately, the end result was that $500 billion were wiped off the total cryptocurrency market capitalization. Terra’s ecosystem was at the forefront of it all, so let’s unpack.
On May 9th, UST – the algorithmic stablecoin of the Terra ecosystem, lost its peg. It fell to about $0.95, but no one was prepared for what happened after that. On the following day, UST continued losing value as the Luna Foundation Guard continued deploying capital in a futile attempt to defend the peg. It all came crashing shortly after – on May 11th, UST was trading at a discount of close to 80%.because of the way the algorithm behind the stablecoin works.
Billions were wiped off the market while exchanges have mostly delisted trading pairs associated with both cryptocurrencies. The Luna Foundation Guard had previously bought as much as $1.5 billion in BTC for its reserves – an amount that’s completely depleted now. This pulled the entire market down. The result – $500 billion was erased from the total capitalization. Bitcoin’s price dropped below $26,000 on some exchanges – levels that we haven’t seen since December 2020.This is all you need not to miss any price action in the raging crypto markets. Start receiving this recap, for free, every day:Many altcoins followed suit, all charting massive declines. Solana dropped below $40, ETH – below $2K, and so forth.
With hopes that the worst is over, it’s exciting to see what the next seven days have in store. Once again – there are no boring days in crypto.
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