$ 200 billion and more disappeared from the crypto market as the sell-off becomes stronger:
Bitcoin fell down $26,000 for the first time in 16 months, it is a broader sell-off in cryptocurrencies that vanished more than $200 billion from the entire market in a single day.
The price of bitcoin dived as low as $25,401.29 on Thursday, according to Coin Metrics. This is the first time in the cryptocurrency that it has dropped below the $26,000 level since Dec. 26, 2020.
Bitcoin has since cut off its losses and was last trading at $28,569.25, down by 2.9%.
Ether, the second-biggest digital currency, dived to as low as $1,704.05 per coin. It’s the first time the token has fallen beyond the $2,000 mark since June 2021. Ether was last down 8.8% for $1,937.88.
Investors are escaping from cryptocurrencies at a time when stock markets have dived from the highs of the coronavirus pandemic on fears over rising prices and a declining economic outlook. U.S. inflation data was out Wednesday showed the prices for goods and services increased by 8.3% in April, higher than expected by analysts and close to the top level in 40 years.
Also weighing on traders’ minds is the downfall of the conflicted stablecoin protocol Terra. TerraUSD, or UST, is supposed to face the value of the dollar. But it abandoned to less than 30 cents Wednesday, shaking investors’ confidence in the so-called decentralized finance space.
Stablecoins are like the bank accounts of the sparely regulated crypto world. Digital currency investors often turn to them for safety in times of unpredictability in the markets. But UST, an “algorithmic” stablecoin that’s strengthened by code rather than cash held in a reserve, has to face problems to maintain a stable value as holders fasten for the exits.
On Thursday, UST was trading at about 41 cents, still well below its planned value which is a $1 peg. Luna, another Terra token that has a floating price and is meant to absorb UST price shocks, vanished 99% of its value and was last worth just 4 cents.