It's been a rough couple of weeks for those involved in the crypto markets, as Bitcoin and other cryptocurrencies have drastically crashed, causing them to lose more than $1 trillion worth of value in the last month, according to Forbes.
Bitcoin was valued at $47,454.10 on March 29, the highest it had been since around Christmas after it reached a yearly high of $67,582.60 on Nov. 8, 2021. As of May 12, the popular cryptocurrency has dropped 26.4% in the last month to $29,504.10 per coin.
The price had dropped 12% on Wednesday alone, bringing it down to around $27,000. In the last year, Bitcoin has crashed 40.39%, losing $19,994.60 in value.
When Bitcoin crashes down, it brings other cryptocurrencies down with it. Ethereum has dropped 9.9% in the last 24 hours, bringing it's value to just $1,994.20. It hit a monthly low of $1,816.64 on Wednesday afternoon, after being up around $3,100 as recent as April 21.
"Bitcoin continued to slide and closed below $30,000 for the first time since last July, although the fall did not trigger a large sell off and the price is trying to recover $30,000 in the Thursday Tokyo session," Yuya Hasegawa, a crypto market analyst at Bitbank, wrote in an emailed note to Forbes.
"The price of bitcoin, however, could still fall due to the UST situation and worsening technical sentiment, but if the U.S. inflation continues to slow down, the macro environment will likely improve and the price will bottom out."
TerraUSD, also known as UST, is an "algorithmic" stablecoin is intended to track the value of the dollar, but it dropped below 40 cents on Wednesday for the first time and caused concern among bitcoin investors.
"However, unlike with those cryptocurrencies, Terra doesn’t have cash and other assets held in a reserve to back its token," CNBC explained. "Instead, it uses a complex mix of code — alongside a sister token called luna — to stabilize prices."
"UST is important for bitcoin investors as Luna Foundation Guard, an organization supporting the Terra project, is sitting on billions of dollars in bitcoin that could potentially be dumped onto the market at any point."
Luna has now collapsed to nearly $0 as of May 12, and it is not backed by any other assets. Do Kwon, creator of the Luna Foundation Guard, is holding around $3.5 billion of bitcoin in reverse, according to CNBC.
Nic Carter, co-founder of Coin Metrics, told CNBC that the main issue with UST is that it's "backed by faith."
"It's not fully guaranteed, it's certainly not fully backed by reserves," Carter said. "It was really just backed by faith in the issuer effectively."
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