Cryptos Today: Bitcoin Tries to Hit $32K as Luna Melts 90% and Could Disappear Before Rescue Plan

After giving indications that it could fall again to US$ 30,000 at dawn, Bitcoin (BTC) dawns the day with a slight recovery and, at 7:15 am, it is trading at US$ 31,807. Although it shows some recovery, the level is still pointed out by experts as too fragile, which would continue leaving the cryptocurrency prone to fall to the range of US$ 28,000 – where the low of 2021 was recorded.

The moment of uncertainty, as expected, scares investors away from altcoins, known to be more volatile and therefore riskier. Among the top 20 cryptos with the highest market cap, the only exception is Ethereum (ETH), which is up 1.9% in the early hours of the day to $2,426. In the last week, the asset that powers the main blockchain for smart contracts has dropped 12.9%, less than the 15.6% given up by Bitcoin.

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Bitcoin is currently experiencing the largest supply of units available on exchanges since November 2017, which ignites the market’s alert for a new sell-off. According to experts, however, the main culprit is the liquidation promoted by the Terra project (LUNA), which has deposited at least $1.5 billion in BTC in exchanges to try to save itself in recent days.

James Check, an analyst at Glassnode, points out that market conditions are very different and it is difficult to make a comparison with the situation five years ago.

“Not the same as 2017 at all, a completely different engine and set of entities at play. What we are looking at is closer to a miniature version of George Soros attacking the pound sterling, in which the LFG (entity that controls the Earth project reserves) is playing the role of the Bank of England (with similar result, it seems)” , he said in an email to CoinDesk.

The main topic of the day, therefore, remains Luna, which was once one of the top 10 cryptos, but is experiencing something unprecedented in the sector: the token melts another 90% in 24 hours and reaches $3.03, in losses that already reach 96% in a week – just over a month ago, crypto was worth almost $120.

The reason is the same that led to the cryptocurrency’s 50% drop yesterday: the experimental system of the stablecoin Terra USD (UST), which uses the Luna token to be generated, and which ended up creating the phenomenon known as the “death spiral”.

Afraid that the stablecoin would lose parity with the dollar, investors began to dispose of the asset in droves, suddenly increasing Luna’s supply on the market and causing the asset’s price to plummet. Fearing an even stronger drop, Luna investors began to liquidate positions, adding to the selling pressure that was then driven by Bitcoin’s pullback.

The result was a systemic decline in the two assets, which are interlinked. The stablecoin that was supposed to be worth US$ 1 is trading today at less than US$ 0.46 and, during the night, it reached US$ 0.30. The Terra project, which was once touted as one of the most promising in the crypto market, saw its market value evaporate from $29 billion to just $2 billion in a week.

The Luna token’s nearly 90% drop came before the project’s creator, South Korean Do Kwon, released a last-minute recovery plan that he said was being prepared by developers. According to sources heard by the website The Block, the idea would be to raise US$ 1 billion with investors to try to rescue the cryptoassets.

Former UST users appear to be switching to the Maker (MKR) protocol, one of the pioneers of DeFi and creator of the Dai (DAI) stablecoin. The project’s MKR token soars nearly 40% this morning.

On Tuesday (10), US Treasury Secretary Janet Yellen mentioned the UST as an example of the kind of threat that stablecoins pose to the global financial system.

“I think this simply illustrates that this is a fast-growing product and that there are risks to financial stability, and we need an appropriate framework,” she said. Later, Yellen stated that it would be “appropriate” to propose legislation to deal with cryptocurrency regulation this year.

  • Watch: Bitcoin’s new fall is an opportunity or a trap? How to deal with the bear market

Check out the performance of the main cryptocurrencies at 7:30 am:

cryptocurrency Price Change in the last 24 hours
Bitcoin (BTC) US$ 31,807.13 +1.1%
Ethereum (ETH) US$ 2,426.22 +1.9%
Binance Coin (BNB) US$ 313.81 -2.2%
XRP (XRP) US$ 0.514772 -0.9%
Cardano (ADA) US$ 0.653424 -2.6%

Cryptocurrencies with the biggest gains in the last 24 hours:

cryptocurrency Price Change in the last 24 hours
Maker (MKR) US$ 1,656.02 +37.1%
Flow $4.29 +13.8%
Chain (XCN) US$ 0.084162 +13.1%
Leo Token (LEO) $5.43 +0.8%
Cell (CELO) US$ 2.10 +2.2%

Cryptocurrencies with the biggest drops in the last 24 hours:

cryptocurrency Price Change in the last 24 hours
Earth (MOON) $3.03 -89.6%
Land USD (UST) US$ 0.538375 -40%
Osmosis (OSMO) $2.03 -30.3%
Fantom (FTM) US$ 0.463711 -20.9%
FraxShare (FXS) US$ 14.80 -20%

Check out how cryptocurrency ETFs closed in the last trading session:

ETF Price Variation
Hashdex NCI (HASH11) BRL 29.00 0%
Hashdex BTCN (BITH11) BRL 38.80 +2.31%
Hashdex Ethereum (ETHE11) BRL 35.41 +2.54%
Hashdex DeFi (DEFI11) BRL 28.34 +0.76%
Hashdex Smart Contract Platform FI (WEB311) BRL 30.04 +3.08%
QR Bitcoin (QBTC11) BRL 10.29 +2.08%
QR Ether (QETH11) BRL 8.70 +3.81%
QR DeFi (QDFI11) BRL 5.01 +0.8%

See the main crypto market news for this Wednesday (11):

Coinbase Has No Bankruptcy Risk, Says CEO

Coinbase founder and CEO Brian Armstrong clarified in a tweet on Wednesday that Coinbase is not at risk of bankruptcy, contrary to what was raised by investors after the company submitted a document to the SEC in the United States.

Armstrong said the exchange “has added a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties.”

The document says that “since crypto assets held in custody may be considered property of a bankrupt estate, in the event of bankruptcy, crypto assets we hold in custody on behalf of our customers may be subject to bankruptcy proceedings and those customers may be treated as our general unsecured creditors,” Coinbase wrote in its recent order.

FSB wants to oversee cryptos on a global level

The Financial Stability Board (FSB) can take the lead in formulating global regulations for crypto assets, its chairman Klaas Knot said yesterday.

“The FSB is well positioned to take a leading role in designing a coherent global regulatory framework for cryptocurrency assets,” Knot said at the annual meeting of the International Swaps and Derivatives Association in Madrid.

The FSB, which is based in Basel, Switzerland, reports to the Group of 20 largest economies in the world and develops rules designed to prevent crises like the ones in 2008 involving large international banks considered too big to fail.

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