terra collapse brought bitcoin price to 2021 levels
Among the most relevant news of the week is the chaos that was generated in the ecosystem since the loss of parity with the dollar stablecoin network Terra and the drastic lowering of bitcoin that came their value to $ 25,000, a price that did not come from July 2021.
This is how the BTC price fell drastically on May 12, to return shortly after to figures close to USD 30,000. The event occurred in the midst of a down season that it has been going on for several weeks and it keeps investors worried.
The fall of the cryptocurrency in the last seven days is estimated at 9,3%. At the time of this writing, BTC is trading at USD 30,410, as reflected in the price of the Latin American and Spanish market, according to the Crypto News price calculator.
These are the most outstanding news:
- On May 9, the Luna Foundation, the entity behind the development of the Terra network, lent just over 20 thousand bitcoins (BTC) and 750 million terra to private companies in order to try to maintain 1:1 parity with the dollar both from terra (MOON) and terra USD (UST). Shortly after, between Monday, May 9 and Tuesday, May 10, leveraged bullish positions of USD 103 million were liquidated due to the fact that the stablecoins did not recover their 1:1 parity. Already by May 12, Terra was paralyzed to introduce a patch, at the height of block 7,603,700. The network was paused for the second time the next day in order to restore the network to the state prior to the “attack” that it would have suffered, according to its developers.
- In the midst of the panic that was generated, it was the South Korean Do Kwon, founder of Terra and director of Fundación Luna, who unveiled the recovery plan that, in the end, did not give the expected results. Many people they claimed to suffer huge losses after the capital they had invested in UST and LUNA disappeared in just a matter of days. One of the stories is that of ZahraBerrada1, who shared on Twitter that he lost the money from the sale of his house. “My husband and I sold our house and we did it through LUNA. I’m trying to digest whether this is happening or it’s just a nightmare,” he said. Even the immortal trader Crypto lost much of the $50,000 I had in Terra USD.
- As the Terra stablecoin debacle became public, other crypto assets such as bitcoin and even the tether stablecoin (USDT) they also suffered the consequences, going down. The cryptocurrency ecosystem reacted not only to the UST and LUNA horror week but also to what happened with its decentralized finance protocols (DeFi), which they suffered a capital flight of more than USD 25,000 million. On the other hand, the Binance exchanges, Crypto.com , OKX, PrimeXBT, Huobi, WazirX, Bitget and BitMEX decided to delist the two Terra crypto assets (although some later added them again).
- The bitcoin market recorded on Thursday, May 12 the largest sales volume since March 2020, while its price found support at $25,000, before rebounding back above $28,000. BTC settlements that day reach USD 2.2 billion, according to CoinGlass figures. For analysts, the outlook does not look good due to the distrust generated by the fall of UST and LUNA, added to that of USDT. For Friday, May 13, there was a rebound in purchases as the Glassnode metric showed BTC accumulation levels. This, while the correlation between bitcoin and the S&P500 it hit an all-time high this week.
- The implosion of Terra triggered the alarms of legislators around the world. In various parts of the planet it is requested that the processing of laws to regulate the crypto-asset industry be accelerated, with the aim of having legal instruments that offer greater protection to users. Regulators are showing signs that they are moving in that direction. On this, US Treasury Secretary Janet Yellen warned about the need to have a regulatory framework for stablecoins, while the European Commission it is considering tough measures on stablecoins. Even to the point of banning them with the idea of preventing them from replacing the euro.
- Between May 11 and 12, the Bitcoin mempool was filled with transactions waiting for confirmation, keeping the miners extremely busy. Despite this, the average mining fees remained below USD 1. In this context, Bitcoin miners continued to increase their mining power, to the point of causing a new record in the difficulty of BTC mining after reaching 31.2 trillion (T) on May 12. Its previous value was 29.7 T, which implied an increase of 5% since its previous adjustment. The hashrate was also on the rise and, according to Braiins statistics, it has returned to its record figure of 228 exahashes per second (EH/s).
If you want to know the meaning of several words in the terminology of the crypto world, you can consult them in the extensive Crypto News Glossary. Here’s a little sneak peek with the word YABC.
YABC (Yet Another Bitcoin Company): it translates as “Yet Another Bitcoin company.” It refers to the fact that the company that is being talked about has nothing particular, but is just another one of the bunch that work with BTC.