How a bitcoin market ‘in extreme fear’ compares with the past, and what to expect next
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, 2022-05-13 16:46:00,
Stablecoin USDTerra, or UST
USTUSD,
once among the top 10 largest cryptocurrency by market cap, lost its 1 to 1 peg against the U.S. dollar, falling to as low as 6 cents on Friday, according to CoinDesk data. LUNA
LUNAUSD,
another cryptocurrency backing UST, fell nearly to zero from over $80 in early May, with its market capitalization shrinking by more than $40 billion from early April.
It marks “the largest wealth destruction event in the short history of the crypto markets,” since bitcoin was created in 2019, crypto trading firm QCP Capital wrote in a Friday note.
Explained: Why is UST, LUNA crashing? Collapse of a once $40 billion cryptocurrency, explained
Meanwhile, bitcoin
BTCUSD,
on Thursday fell to $25,402, the lowest level since December 2020, before it rebounded to about $30,000 on Friday, according to CoinDesk data. The bitcoin fear and greed index currently stands at one of its lowest points, indicating extreme fear.
Tether
USDTUSD,
the largest stablecoin, briefly fell to as low as 96 cents against the dollar on Thursday, before it rebounded to $1.
More than $400 billion has been wiped out from the crypto market during the past seven days, according to CoinGecko. All sectors within the crypto space have seen double-digit losses during this period, with cryptocurrencies related to Web 3, the so-called next generation of the internet, posting the biggest loss of 41% on average, according to analysts at Messari.
The series of events may herald the beginning of another “crypto winter,” said one industry participant, echoing a common theme this week on Twitter.
Some are more optimistic….
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