Big panic and soaring fortunes: cryptos are collapsing – korii.

In early April, enthusiastic enthusiasts and blockchain superstars gathered at the Bitcoin Conference in Miami to party, celebrate their successes and shout down the crypto skeptics. Today, forums for crypto investors publish suicide hotline numbers. How did we get here? As they become more popular, cryptocurrencies are behaving more and more like traditional stocks following the trends of the American financial markets. However, with a stock market in bad shape, mainstream cryptos such as bitcoin and ethereum have followed the Nasdaq in its fall. However, despite their democratization, these digital currencies have retained their very volatile aspect and remain subject to sharp falls. Thus, the value of bitcoin is for a time below its level of July 2021, its last big crisis to date, and could continue to fall. The problem is that bitcoin is by far the biggest player in cryptocurrencies, and that he therefore drags down both the other currencies and the satellite companies. Coinbase, the largest crypto exchange platform, has completely stalled. In a few hours, its CEO saw his fortune grow from 13.7 to 2.2 billion dollars (or from 13.2 billion euros to 2.1 billion euros). the same treatment. Investor Michael Novogratz thus lost three quarters of his 8.5 billion dollars (8.2 billion euros). But the most impressive meltdown is undoubtedly that of the wallet of Changpeng Zhao, the CEO of Binance, which fell from 96 to 11.6 billion dollars (from 92.2 to 11.1 billion euros). That’s a drop of about 88%. If these figureheads of cryptos still have a few billion to mop up their tears, the situation is sometimes dramatic for more modest investors. Collective plunge To make matters worse, the situation is such that even “stablecoins”, cryptos specially designed not be prone to sudden market fluctuations, are in the process of unscrewing. This is the case of Terra (UST), a very popular crypto, supposed to follow the movements of the dollar. Terra is backed by a sister currency, Luna, which fluctuates according to supply and demand. The principle is that when the UST deviates from the value of the dollar, it can still be exchanged for the equivalent of 1 dollar of Luna. Thus, if the UST is worth 99 cents, it is possible to exchange it for 1 dollar in Luna and make an immediate profit. The demand for UST therefore increases mechanically, and it returns to 1 dollar. This is called arbitrage. Only a panic on the platform where Luna is traded caused the currency to fall by 96%. Thus, the arbitration began to skate, and the UST, a supposedly stable value, also fell a lot, reaching 60 cents on Wednesday May 11. However, Terra Luna relies on an immense reserve of bitcoins amassed by its developers in the event of a crisis. The problem is that if some of these bitcoins are used and hit the market, they could help drive the currency even deeper than it currently does.