Business Brief

Controversial stablecoin Terra, LUNA tank as Bitcoin dips below $26k

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Bitcoin and other cryptocurrencies tumbled Thursday amid a massive sell-off in the space, triggered by a risk-off and collapse of stablecoins. Based on estimates from CoinMarketCap, about $200 billion in wealth was wiped from the cryptosphere in 24 hours.

Bitcoin dipped below $26,000 Thursday morning before recovering some, down about 11% over the 24-hour period. Ethereum lost around 20% of its value and Solana lost 30%.

While there’s a general sell-off in risk markets now, the decimation of cryptocurrency is more tied to current financial catastrophes in the stablecoin space with TerraUSD (UST) and its sister coin, LUNA.

Stablecoins are supposed to be volatility-free cryptocurrency pegged to a stable currency, like the U.S. dollar. Investors expect it to be a safe place to store crypto assets in between trades. Many are backed by actual assets, but Terra is backed by an algorithm instead.

This week, UST, which is meant to be a one-to-one peg to the dollar, depegged, plunging as low as 26 cents. The collapse of it and Terra-backed LUNA, which went from trading around $80 to zero cents in less than a week, is rippling through the rest of the cryptocurrency space.

By Thursday afternoon, Terraform Labs announced it halted the Terra blockchain because the price of LUNA was too low to “prevent governance attacks.”

SIMONE DEL ROSARISO: DID YOU SEE BITCOIN’S PRICE THIS MORNING? THE MOST POPULAR CRYPTOCURRENCY DIPPED INTO THE 25-THOUSAND DOLLAR RANGE AMID A MASSIVE SELL OFF IN THE SPACE.

BASED ON ESTIMATES FROM COINMARKETCAP – ABOUT 200 BILLION IN WEALTH WAS WIPED FROM THE CRYPTOSPHERE IN 24 HOURS.

BITCOIN WAS DOWN ABOUT 11% IN THAT TIME – WHERE ETHEREUM LOST 20% – AND SOLANA LOST 30%.

WHILE RIGHT NOW WE’RE SEEING A GENERAL SELL OFF IN RISK MARKETS – THE DECIMATION OF CRYPTOCURRENCY HAS A LOT TO DO WITH THE COLLAPSE OF STABLECOINS.

STABLECOINS ARE SUPPOSED TO BE VOLATILE-FREE CRYPTOCURRENCY THAT’S PEGGED TO A STABLE CURRENCY, LIKE THE DOLLAR. IT’S SUPPOSED TO BE A SAFE PLACE TO STORE YOUR CRYPTO IN BETWEEN TRADES.

MANY ARE BACKED BY ACTUAL ASSETS,

BUT WATCH WHAT HAPPENED TO TERRA USD THIS WEEK, WHICH IS BACKED BY AN ALGORITHM INSTEAD. *MEANT TO BE A ONE-TO-ONE PEG TO THE DOLLAR – TERRA DEPEGGED, PLUNGING AS LOW AS 26 CENTS.

AND NOW THE COLLAPSE OF IT AND ITS SISTER COIN LUNA – WHICH WENT AS LOW AS TWO CENTS! – IS RIPPLING THROUGH THE REST OF THE SPACE.

IN NEW YORK FOR JUST BUSINESS I’M SIMONE DEL ROSARIO.

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Bitcoin and other cryptocurrencies tumbled Thursday amid a massive sell-off in the space, triggered by a risk-off and collapse of stablecoins. Based on estimates from CoinMarketCap, about $200 billion in wealth was wiped from the cryptosphere in 24 hours.

Bitcoin dipped below $26,000 Thursday morning before recovering some, down about 11% over the 24-hour period. Ethereum lost around 20% of its value and Solana lost 30%.

While there’s a general sell-off in risk markets now, the decimation of cryptocurrency is more tied to current financial catastrophes in the stablecoin space with TerraUSD (UST) and its sister coin, LUNA.

Stablecoins are supposed to be volatility-free cryptocurrency pegged to a stable currency, like the U.S. dollar. Investors expect it to be a safe place to store crypto assets in between trades. Many are backed by actual assets, but Terra is backed by an algorithm instead.

This week, UST, which is meant to be a one-to-one peg to the dollar, depegged, plunging as low as 26 cents. The collapse of it and Terra-backed LUNA, which went from trading around $80 to zero cents in less than a week, is rippling through the rest of the cryptocurrency space.

By Thursday afternoon, Terraform Labs announced it halted the Terra blockchain because the price of LUNA was too low to “prevent governance attacks.”

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