The cryptocurrency market has had a more than tough week – investors and crypto experts in their desperation are talking about an unparalleled “bloodbath”. And according to the current assessment of experts, a sigh of relief is far from being to be thought of.
No major cryptocurrency has been spared: stablecoin USDTerra (or UST USTUSD, 17.86%), which once ranked among the top 10 largest cryptocurrencies by market cap, lost its 1:1 peg to the , according to CoinDesk data US Dollar and fell as low as 6 cents on Friday. LUNA (LUNAUSD, 43.75%), another UST-backing cryptocurrency that was trading above $80 in early May, actually fell to near zero last week. The market cap of this coin has shrunk by more than $40 billion since early April.
Cryptocurrency Tether (USDTUSD, -0.03%), currently the largest stablecoin, briefly fell as low as 96 cents against the dollar on Thursday before rallying back to one US dollar.
Unsurprisingly, crypto trading firm QCP Capital described last week’s events as “the largest wealth-destroying event in the short history of crypto markets” in a statement on Friday.
According to CoinGecko, more than $400 billion has been wiped out of the crypto market in the past seven days. All sectors within the crypto space have seen double-digit losses over the period, with cryptocurrencies related to Web 3, the so-called next-gen internet, posting the biggest losses averaging 41 percent, according to analysts at Messari.
This development could herald the start of another “crypto winter,” experts fear.
The development of Bitcoin (BTCUSD, -1.40%) also supports this assessment: It fell to 25,402 US dollars on Thursday – the lowest level since December 2020. According to CoinDesk data, the “mother of all crypto currencies” was able to secure itself on The Bitcoin Fear and Greed Index is currently at one of its lowest points, indicating extreme anxiety among investors. Some investors even fear that Bitcoin could be heading for a “historic low”.
Historically, every time Bitcoin’s price approached the realized price, it indicated a buying opportunity, Clemente said in a recent interview with industry magazine MarketWatch. It’s also worth watching Bitcoin’s 200-week moving average price, which usually signals a cyclical bottom, Clemente said. It is currently just over $21,500.
Nevertheless, great uncertainties remain on the financial markets, as the price movements of all shares show. Jay Hatfield, Chief Investment Officer at Infrastructure Capital Management, recently confirmed to the industry magazine “MarketWatch” that this is also in line with investor expectations. He predicted, “I think this is just the beginning of a sustained decline in crypto.”