The cryptocurrency market has lost more than $300 billion this week as Terra’s crisis dominates the headlines.
Terra’s UST De-Pegs From The Dollar
The major headline this week is the de-pegging of Terra’s UST stablecoin from the US Dollar. The stablecoin began to lose its value against the US Dollar over the weekend and the crisis continued well into the week.
UST traded at a low of $0.26 before bouncing back to currently stand above $0.50. The crisis began when investors starting selling their UST stablecoins and converting them to other stablecoins. The massive pressure faced by UST saw the stablecoin lose its dollar peg and crash to the $0.26 lows.
The Luna Foundation Guard, or LFG, has been working hard to secure funding (around $1 billion) to ensure that the UST stablecoin regains its peg against the US Dollar but the effort has been futile so far.
Terraform Labs CEO Do Kwon revealed his plan of action to help the stablecoin TerraUSD (UST) return to its dollar peg. However, that hasn’t helped the UST to recover its value.
The crisis resulted in LUNA, the native token of the Terra ecosystem to lose more than 99% of its value over the past few days. LUNA was trading around $100 a week ago but is now trading at $0.01502 per coin. It was previously one of the top 10 cryptocurrencies by market cap but now occupies the 360th position in the market.
The team behind the Terra ecosystem has been minting LUNA exponentially in a bid to salvage the situation. For the last few weeks, LUNA’s total supply stayed around the 325 million mark. However, it shot up to 1.5 billion yesterday and today it has increased as high as 25.3 billion. The number of tokens is expected to increase again over the coming days.
Crypto exchanges like Binance have halted the withdrawals of LUNA and UST amidst the market carnage.
Bitcoin Drops Below $30k
The cryptocurrency market has lost nearly $300 billion since the start of the week. Earlier this week, the total crypto market cap was around $1.5 trillion. However, it currently stands above $1.2 trillion.
Bitcoin has lost nearly 20% of its value this week and is trading below the $30k mark again. With Bitcoin recording such losses, the other leading cryptocurrencies have also recorded massive losses over the past few days.
El Salvador has taken advantage of the dip to purchase 500 Bitcoins earlier this week. President Bukele said El Salvador bought 500 Bitcoins at an average USD price of ~$30,744.
US Treasury Secretary Yellen Wants Stablecoin Regulation This Year
Treasury Secretary Janet Yellen is calling for stablecoin legislation by the end of the 2022. Yellen pointed to the ongoing UST saga, adding that it is important to regulate the stablecoin market as their importance in the crypto space is growing. She said; “A stablecoin known as TerraUSD experienced a run and declined in value. I think that this simply illustrates that this is a rapidly growing product and there are rapidly growing risks.”
NFT Prices Decrease Amidst Bearish Crypto Market
The prices of NFTs have underperformed this week thanks to the ongoing bearish sentiment in the broader cryptocurrency market. The popular Bored Ape Yacht Club (BAYC) has seen its floor price decline by 25% over the past week to 88 ETH according to data compiled by The Block. CryptoPunks' floor price has also decreased by 15% to 52.5 ETH over the same period.
Coinbase’s Stock Price Plunges Due To Poor Performances
Cryptocurrency exchange Coinbase posted a net loss of $430 million in the first quarter of 2022. Accoridng to the company’s shareholder letter, Coinbase generated $1.16 billion in revenue in Q1 2022, below Wall Street’s estimation of $1.5 billion. The massive losses can be attributed to the decline in Bitcoin prices and the bearish trend in the broader market. Coinbase saw its shares drop by more than 20% Wednesday morning but is slowly recovering some of its lost value.
Dapper Labs Launches a $725 Million Ecosystem Fund For Its Flow Blockchain
Dapper Labs, the company behind the NFT-focused blockchain Flow, announced earlier this week that it had launched a $725 million ecosystem fund. The team said the Ecosystem Fund will support existing and future developers in building applications on the Flow blockchain through investments, FLOW token grants and in-kind support. The fund is available to developers around the globe and will focus on support for gaming, infrastructure, decentralized finance, content and creators.
Algorand And Hivemind Acquire Napster
Hivemind Capital announced on Tuesday that it has partnered with Algorand to acquire the music streaming platform Napster. Hivemind said the desire is to revolutionize the music industry by bringing blockchain and Web3 to artists and fans.
KuCoin Reaches a $10 Billion Valuation
Crypto exchange KuCoin has reached a $10 billion valuation after raising $150 million in a latest funding round. The funding round was led by Jump Crypto and saw participation from other investors including Circle Ventures, IDG Capital and Matrix Partners