Crypto Market Continues Freefall as Bitcoin, Ethereum Tank

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

Crypto Market Bleed Continues

When it rains, it pours—not least in crypto.  

The digital assets market is suffering again today as sell-offs continue. Bitcoin is down 11.2%, trading at about $28,250. The top crypto asset registered a daily close below $30,000, which has acted as a crucial psychological support level for more than a year, Wednesday as panic across the market escalated. While Bitcoin has taken a big hit, most lower cap assets have fared much worse. Ethereum, the second-biggest cryptocurrency, has broken below $2,000 for the first time since July 2021 after suffering a 20.1% decline. It’s currently changing hands for around $1,950. 

The likes of Solana, Avalanche, and Polkadot, networks sometimes described as Ethereum competitors, have all tumbled harder. Solana is trading at $46.05 after a 29.5% correction, now 83% short of its November all-time high. Avalanche is down 27.4%, and Polkadot has erased 25.1% of its value. 

Besides the Ethereum alternatives, DeFi has also been hard hit 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 a 35.4% hit, while the Metaverse hit Decentraland has fallen to $0.71 after losing 32% of its value.

Still, while the market is in freefall, no crypto project has suffered more than Terra. The Layer 1 blockchain is in meltdown mode this week due to its algorithmic stablecoin, UST, losing its peg against the dollar. UST is currently worth just $0.46 while the network’s volatile token, LUNA, is trading at around $0.08. To maintain the dollar peg, UST can be exchanged for $1 worth of LUNA, but this week Terra entered a death spiral as the stablecoin’s holders rushed to exit their positions, leading to what’s known as a bank run. LUNA topped $119 on Apr. 5. This week, it’s down 99.9%. 

In addition to the Terra crisis, the crypto market is also likely experiencing a selloff due to its close correlation with traditional stocks. The likes of Netflix and Facebook have suffered unprecedented losses in recent weeks as fears that the Big Tech bubble may have burst start to escalate. What’s more, adding to the macroeconomic uncertainty, the Federal Reserve has just hiked interest rates by 50 basis points with another hike expected in June 2022. 

After today’s bloodbath, the global cryptocurrency market cap has fallen to $1.2 trillion. That’s 60% short of its $3 trillion peak of seven months ago. By all accounts, the crypto space is deep into a bear market, and there’s still no clear sign of brighter skies ahead. 

Disclosure: At the time of writing, the author of this piece owned ETH, AAVE, MATIC, and several other cryptocurrencies. They also had exposure to MKR in a cryptocurrency index.