Crypto Market Continues Freefall as Bitcoin, Ethereum Tank

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Crypto Market Continues Freefall as Bitcoin, Ethereum Tank
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The cryptocurrency market experienced a sharp decline today. Amid macroeconomic uncertainty and the ongoing Terra crisis, Bitcoin, Ethereum, and many other assets are in the red. The global cryptocurrency market capitalization is now 60% below its peak.

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The global cryptocurrency market capitalization has fallen to $1.2 trillion, down 60% from its peak.

Crypto Markets Continue to Bleed

When Ming is a blockbusterEspecially in cryptocurrencies.

The digital asset market took another hit today as the sell-off continued. Bitcoin fell 11.2% to trade around $28,250. On Wednesday, the top crypto asset closed below $30,000 on a daily basis, which has been a key psychological support level for more than a year, as panic escalated across the market. While Bitcoin took a hit, most low-cap assets fared much worse. The second-largest cryptocurrency, Ethereum, fell below $2,000 for the first time since July 2021 after a 20.1% drop. It currently changes hands for about $1,950.

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Networks such as Solana, Avalanche and Polkadot, sometimes described as rivals to Ethereum, all fell even worse. Solana is trading at $46.05 after a 29.5% correction and is now 83% below its November all-time high. Avalanche is down 27.4%, while Polkadot has wiped out 25.1% of its value.

In addition to Ethereum alternatives, DeFi has also been hit hard, with so-called “blue chips” Aave and MakerDAO both suffering losses of more than 30%. Ethereum’s top scaling solution Polygon is trading at $0.56 after taking a 35.4% hit, while Metaverse’s Decentraland fell to $0.71 after losing 32% of its value.

Still, no crypto project has suffered more than Terra, despite the market being in free fall. The Layer 1 blockchain was in crash mode this week as its algorithmic stablecoin UST lost its peg to the U.S. dollar. UST is currently valued at just $0.46, while the network’s volatile token, LUNA, is trading at around $0.08. To stay pegged to the dollar, UST can be exchanged for $1 worth of LUNA, but Terra entered a death spiral this week as holders of the stablecoin rushed to exit their positions, leading to a so-called bank run. LUNA broke above $119 on April 5. For the week, it’s down 99.9%.

In addition to the Terra crisis, the crypto market may also be experiencing a sell-off due to its close correlation with traditional stocks. Companies such as Netflix and Facebook have suffered unprecedented losses in recent weeks as fears escalated that the tech giant’s bubble may have burst. What’s more, the Fed just raised interest rates by 50 basis points and is expected to do so again in June 2022, adding to macroeconomic uncertainty.

After today’s carnage, the global cryptocurrency market cap has fallen to $1.2 trillion. This is 60% below the peak of $3 trillion seven months ago. By all accounts, the cryptocurrency space is deep in a bear market, and there are still no clear signs that the sky will be brighter in the future.

Disclosure: At the time of writing, the author of this article owns ETH, AAVE, MATIC, and several other cryptocurrencies. They also have exposure to MKR in cryptocurrency indices.

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