“Crypto-investors face a mess”
Panic is spreading in the cryptocurrency market. Bitcoin is falling to its lowest level since the end of 2020.
A New York stockbroker stares in disbelief at charts showing the Dow Jones plunging over 200 points this morning. (May 6, 2022)
Photo: Spencer Platt (AFP)
The cryptocurrency market is being dragged down into the abyss by the financial markets plagued by inflation concerns. “Crypto-investors are in a mess,” sums up capital market strategist Jürgen Molnar from RoboMarkets’ situation. This is shown in an impressive way, among other things, by the price development of the share on the American 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 stock started at just under $ 370.
Back then, many crypto investors saw it Coinbase went public as a sign of the arrival of cryptocurrencies in the financial mainstream. In retrospect, however, this broad adjustment can now be fatal. Crypto assets, including Bitcoin, which has long been traded as “digital gold”, are being sold off in large numbers. The story of Bitcoin as a protection against inflation is definitely over for now.
Stablecoin is fighting for survival
The collapse of stablecoin TerraUSD, or UST for short, made things even harder for crypto investors. Originally pegged to the dollar and controlled by an algorithm, the blockchain currency of the Terra Foundation, which developed the also collapsed cryptocurrency LUNA, fell briefly below the 30 cents mark on Wednesday. “Confidence in this market seems to have been destroyed forever,” Molnar states.
UST’s market value has plummeted from over $ 18 billion to just over $ 7.5 billion. Even the sale of deposited securities from the Terra Fund has so far not been able to re-establish the connection to the dollar.
On Thursday, panic spread over the loss of value on other stack coins on the market. The largest stable currency, the Tether, with a capital of over 170 billion, also briefly threatened to be “decoupled” to the dollar.
“Judgment and gloom not appropriate”
Meanwhile, the experts at DZ Bank do not want to endorse the doomsday prophecies: “Despite the losses, a doomsday mood is not appropriate,” reads a recent comment. “The convinced community and committed companies should stick to Bitcoin,” the forecast reads. Other market observers also agree.
Many of the projects that have been created in recent years are unlikely to survive the market upheaval, and Bitcoin is also likely to have a difficult time ahead of it as well. Market observers, however, emphasize that the oldest and best-known cryptocurrency is here to stay (Read our money blog about the future of bitcoin: Will we all pay with cryptocurrencies in ten years?).
the descent continues
So far, however, the downward trend is not taking a break: 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 decline. 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. Last November, the market broke a new record of nearly $ 3 trillion.
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