Technology

Cryptos have healed their wounds after Terra Crash

(Boursier.com) — Cryptocurrency prices bounced back on Friday, ending a bloody week marked by the crash of the stablecoin. UST and cryptocurrency Moon, both run on the Terra blockchain. These two cryptocurrencies lost almost all of their value in a matter of days, ruining many investors and seriously damaging the credibility of cryptocurrencies.

Thus, in one week, the fall of the cryptocurrency evaporated at least $ 270 billion in the entire virtual currency market, the capitalization of which returned to $ 1.210 billion on Thursday evening, according to specialized website Coinmarketcap.com.

After the collapse of its Terra cryptocurrency, the blockchain created in 2018 was forced to suspend its operation on Friday morning. However, the other listed blockchains, starting with bitcoin, have recovered, somewhat dispelling fears of a systemic infection. Friday evening, t. bitcoinwhich fell nearly $26,000 on Thursday morning, traded around $30,100 with a 5.3% gain in 24 hours, though still far from its November 2021 record of almost $69,000. Etherblockchain-driven Ethereum rose from $2,000 to $2,058, up 8.6% in 24 hours after falling below $1,750 on Thursday morning, and Binance recovered 11.4% to $296.40.

Terra’s UST, an “algorithmic” stablecoin

Major stablecoins other than UST held up well, acting as a safe haven after UST’s setbacks: Friday night, Leash almost regained parity with the dollar at $0.9988 after falling to $0.95 on Thursday andUS dollar coin remained fixed at $1 after being quoted even at $1.008 in the morning.

Both Tether and USD Coin have shown their strength by guaranteeing as many dollars in reserve as there are stablecoins in circulation. On the other hand, UST Terra is one of the so-called “algorithmic” stablecoins that work with reserves placed in assets other than the underlying asset to which they are pegged, in this case Luna cryptocurrency and a basket of currencies… Algorithms are responsible for maintaining parity with the dollar, but the system was shattered this week due to widespread risk aversion in financial markets.

UST and Luna Terra fell close to zero

Thus, the world of cryptocurrencies suffered this week the biggest crash since the emergence of virtual currencies ten years ago, and bitcoin was born in 2009. stablecoins, cryptocurrencies that must remain pegged to a benchmark asset, in this case the dollar per UST (US Terra). However, instead of being quoted at $1, UST has been off the dollar in recent days, first falling to $0.5 on Wednesday and then to less than $0.10 on Friday before the suspension of the Terra blockchain.

As for Luna, it fell almost to zero on Thursday, while a week earlier it was trading at over $80… The survival of the Terra blockchain now seems compromised, and The South Korean founder of this blockchain, Do Kwon, has been silent since Wednesday. on his Twitter account. He then promised to do everything possible to get out of this crisis.

Washington highlights the need for regulation of the sector

The shockwave hit the entire cryptocurrency environment hard and was also reflected in the fall of the Nasdaq stock index, which consists of many technology stocks. This new crisis in the crypto market, which has survived other setbacks in the past, including the Mt.Gox scandal in 2014, forced the US authorities to react, starting with Treasury Secretary Janet Yellen, who initially believed that this collapse did not pose a “real threat” to US financial stability..

During a hearing in the House of Representatives, the Treasury Secretary, who also chaired the Federal Reserve, once again called for increased regulation of digital assets: “We really need a regulatory framework to protect against the risks” associated, in particular, with stablecoins. , she said.

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