Bitcoin (BTC) — the world’s largest and most popular cryptocurrency by market capitalization — collapsed by around 30%, with prices standing at $29,790 and a 24-hour trading volume of $569.957 billion. As crypto traders looked forward to a comparatively stable weekend, Bitcoin failed to reach the $30,000 mark, becoming rapidly consistent.
Bitcoin had just touched $31,000 before plummeting, while the traditional stock market received fresh warnings of a new all-time low in the coming days. The cryptocurrency has gotten caught up in a widespread market selloff as crypto investors sold it alongside other high-risk assets like tech stocks. This selloff resulted in the stock market’s decline, with Dow Jones Industrial Average falling below 1,000 points and the NASDAQ crashing 5% during the first week of May — reaching an all-time low since 2020.
Terra’s LUNA Stablecoin Skyrockets by Almost 600%
The price of LUNA, the native stablecoin of the open-source blockchain transaction platform Terra, has risen sharply by almost 600% after suffering the worst deflation. But what caused LUNA to crash all of a sudden?
A few weeks ago, Terra’s LUNA token was the largest stablecoin in the world. But in March, Terra went for a high-risk investment and bought up to $10 billion in Bitcoin to increase the value of its coins. During the same time, Bitcoin and all other cryptocurrencies suffered a major blow-off because of tightened financial policies. Together with raging inflation, these regulations accelerated a broad-based decline in the traditional stock market.
After consistently declining in value over the week, LUNA saw a boom which was little compared to its all-time highs above $100. However, this slight rebound was hugely opportunistic for short-term crypto traders. Because of this jump, attention stayed on Terra’s LUNA stablecoin.
Irrespective of its supply burgeoning to 6.9 trillion tokens, Terra’s LUNA stablecoin consequently appreciated 100 times from its floor price on headlines that indicated Terra’s developer had plans to “revive” its stablecoin. Most crypto investors were in disbelief, given the uncertainty and ambiguity in the crypto landscape.
Michaël van de Poppe, a contributor at CoinTelegraph, said: “The volatility on Terra’s LUNA stablecoin is insane,” adding that it was an insane weekend “to scalp trade a little.”
Trading of LUNA/USD has already halted on major crypto trading platform Binance, making it a highly risky stablecoin with prices fluctuating wildly every minute and between trading platforms. Crypto investors who bought the stablecoin through the week conversely experienced near-total losses on their gains.
Terra’s LUNA reached $0.0027 in trades on Bitfinex, having increased to $0.034 earlier in the day, suggesting gains of almost 593% after hitting all-time lows of $0.0049.
The cryptocurrency collapse can be understood as a major part of the tightening financial conditions, and it may be far from over. The market is likely to decline more in the coming days before regaining stability.