Panic is spreading in the cryptocurrency market

Bitcoin and Co.

The cryptocurrency market is being dragged into the abyss by financial markets plagued by fears of inflation. The “crypto key currency” Bitcoin falls to its lowest level since the end of 2020.

“Crypto investors are in a shambles,” is how capital market strategist Jürgen Molnar from RoboMarkets summarizes the situation. This is impressively shown, among other things, by the price development of the share on the US crypto exchange Coinbase.

The course has lost more than 80 percent of its value since November last year and is currently trading at just over $50. When the group made its stock market debut in April 2021, which was celebrated in the crypto scene, the share started at just under $370.

Back then, many crypto investors saw Coinbase’s listing as a sign of the arrival of cryptocurrencies into the financial mainstream. In retrospect, however, this broad adaptation could now be fatal.

Crypto assets, including bitcoin, which has long been traded as “digital gold”, are sold off in large numbers. The narrative of Bitcoin as a protection against inflation is certainly over for the time being.

Stablecoin is fighting for survival

The collapse of the stablecoin TerraUSD, or UST for short, made things even more difficult for crypto investors. Originally tied to the dollar and controlled by an algorithm, the blockchain currency of the Terra Foundation, which developed the also collapsed cryptocurrency LUNA, briefly fell below the 30 US cent mark on Wednesday. “Confidence in this market seems to have been destroyed forever,” states Molnar.

UST’s market cap has plummeted from over $18 billion to just over $7.5 billion. Even sales of deposited securities by the Terra Foundation have so far not been able to reestablish the connection to the dollar.

On Thursday, panic spread about the loss in value of other stablecoins in the market. The largest stablecoin, Tether, with a capitalization of over 170 billion, was also briefly threatened with “de-pegging” to the dollar.

“Doom and gloom not appropriate”

Meanwhile, the experts at DZ Bank do not want to join in the prophecies of doom: “Despite the losses, a mood of doom is not appropriate,” says a recent comment. “The convinced community and committed companies should stick to Bitcoin,” is the forecast. Other market observers also agree on this.

Many of the projects that have been created in recent years are unlikely to survive the market shakeout and Bitcoin is also likely to have a difficult time ahead of it. Market observers emphasize that the oldest and best-known cryptocurrency is here to stay.

descent continues

For the time being, however, the downward trend is not taking a breather: Bitcoin fell back to $25,338 on the Coinbase trading platform, marking its lowest level since the end of 2020. In the last week alone, Bitcoin has lost almost a third of its value.

Other blockchain values ​​also continued to fall. Ether, the second largest cryptocurrency after Bitcoin, fell well below the $2,000 mark. Ether has lost about half of its value year-to-date. The market value of all cryptocurrencies listed on CoinGecko is currently around $1.26 trillion. In November last year, the market reached a new record of almost $3 trillion.

Source: com! professional by

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