Among the most outstanding news of the week is the chaos that was generated in the ecosystem from the loss of parity with the dollar of the stablecoin of the Terra network and the drastic drop in bitcoin that brought its value closer to USD 25,000, a price that has not been reached since July 2021.
This is how the price of BTC fell drastically on May 12, to return shortly after to figures close to USD 30,000. The incident occurred in the midst of a bearish season that has lasted for several weeks followed and 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 market price of Latin America and Spain, according to the CriptoNoticias price calculator.
These are the most important 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 terra (LUNA) and terra USD (UST). Shortly thereafter, between Monday May 9 and Tuesday May 10, $103 million of leveraged bullish positions were liquidated as stablecoins failed to regain their 1:1 parity. By May 12, Terra was paralyzed to introduce a patch, at block 7,603,700. The network was paused for a second time the following day with the aim of restoring the network to the state prior to the “attack” 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 announced the recovery plan that, in the end, did not give the expected results. Many people reported suffering 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 if this is happening or if it’s just a nightmare,” he said. Even the trader ImmortalCrypto lost much of the $50,000 he had in Terra USD.
- As the Terra stablecoin debacle became public, other crypto assets such as bitcoin and even stablecoin tether (USDT) also suffered the consequences, going down. The cryptocurrency ecosystem reacted not only to the UST and LUNA week of terror but also to what happened with their decentralized finance (DeFi) protocols, which suffered a capital flight of more than USD 25,000 million. For their part, the exchanges Binance, Crypto.com, OKX, PrimeXBT, Huobi, WazirX, Bitget and BitMEX decided to delist the two crypto assets from Terra (although some later added them back).
- The bitcoin market recorded on Thursday, May 12 the largest sales volume since March 2020while its price found support at $25,000, before bouncing back above $28,000. BTC settlements that day reach $2.2 billion, according to figures from CoinGlass. For analysts, the picture does not look good due to the mistrust generated by the fall of UST and LUNA, added to that of USDT. For Friday, May 13, there was a spike in purchases as the Glassnode metric showed BTC accumulation levels. This, while the correlation between bitcoin and the S&P500 reached an all-time high this week.
- Terra’s implosion set off alarm bells among lawmakers around the world. In various parts of the planet it is requested that the processing of the laws to regulate the cryptoactive industry be acceleratedwith the aim of having legal instruments that offer greater protection to users. Regulators are giving signs that they are moving in that direction. On this, the United States Treasury Secretary, Janet Yellen, warned about the need to have a regulatory framework for stablecoins, while the European Commission is considering tough measures on stablecoins. Even to the point of prohibiting 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 miners extremely busy. Despite this, the average mining commission 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 mining BTC after reaching 31.2 trillion (T) on May 12. Its previous value was 29.7 T, which was a 5% increase from its previous setting. The hashrate has also been on the rise and, according to Braiins statistics, has returned to its record high of 228 exahashes per second (EH/s).
If you want to know the meaning of several words of the terminology of the crypto world, you can consult them in the extensive Glossary of CriptoNoticias. Here’s a little preview with the word YABC.
YABC (yet another Bitcoin company): translates to “Yet Another Bitcoin Company.” It refers to the fact that the company that is being talked about has nothing in particular, but is just another one of the bunch that works with BTC.