The attached overview from Coin360 shows the dramatic performance of the crypto market over the past seven days. The total crypto market cap dropped significantly over the past week to $1,236 billion.
In the process, however, Bitcoin’s market dominance showed an increase to 43.48%. Bitcoin’s market cap fell over 27% in the past week to $553 billion. The market dominance of Ethereum (ETH) remained stable around 19%, while the market cap of the number 2 coin dropped significantly to $237 billion.
Crypto market crashes in wake of Terra/UST
In recent weeks, equity markets and also the crypto market began to slide in its wake. The reason was the increasing fear of fear and the US Fed’s interest rate increases. ‘Europe’ could not be left behind either and it looks like imminent interest rate hikes are going to take place on our continent as well.
On the crypto market, however, mercy strikes were dealt by the crash in Terra that released the stablecoin UST. The UST was supposed to represent a value of $1 in principle. However, this stablecoin turned out to be not so stable. Investors did not trust the peg with the USD as is the case with USDT, BUSD and USDC. Unlike the latter stablecoins, Terra uses an ‘algorithmic peg’ where UST is linked to sistercoin Luna.
The UST lost the peg to the USD with the price falling well below 1 USDT. Indeed, the UST price even dropped to a low of 0.225. However, Terra’s (LUNA) price fell even harder: a drop of more than 90% towards USDT 0.016.
We can safely say that the stablecoin market is undergoing a severe test. However, it is worth noting that the “normal” stablecoins such as USDT, BUSD and USDC are (for now) holding their value well.
Mainly due to the fact that they are covered by USD. This is in contrast to stablecoins that are based on algorithmic pegs. There is still much work to be done for these types of coins to regain confidence or to justify their existence.