There was big crypto news from last week; Saying that a crypto crash took place would be an understatement. Shortly after Monday came around, many of the most significant coins reached their lowest values since 2020 — and at least one went even lower than that.
Although the market has begun to show some signs of recovery now, plenty of damage remains, so let’s look at where things stand.
The worst-affected cryptocurrency of all was LUNA of the Terra protocol, which fell by a shocking 100%, taking it back to a price even lower than when it was first launched. Meanwhile, UST fell by 85.1%, OSMO by 50.8%, and CVX by 47.1%. Unlike crashes in other markets such as real estate, or listed stocks, crypto investors are used to volatility but the scale of the drop left the market reeling.
Surprisingly, two cryptocurrencies managed to increase in these conditions. MKR rose by 24.5% and XCN by 11.3%.
The biggest cryptos weren’t immune either. BTC fell by 12.4% and 18.7% (they dropped lower at their worst points), while XRP fell by 23.5%, BNB by 15.2%, ADA by 22.2%, and OSL by 27.3%. Traders and investors can do a
1) Luna and Terra Crash
So, what prompted such dramatic drops? One of the biggest reasons is last week’s biggest losers, LUNA and TERRA. Both projects use USDT, the biggest stablecoin in the whole of crypto, so the phenomenon sent shockwaves through the community. However, these projects began to fall in the first place, perhaps due to broader macroeconomic factors — fears of inflation are rife, interest rates are rising, and the stock market has also fallen.
As a result, three exchange-traded product issuers (VanEck, Valour, and 21Shares) have all revealed they will stop issuing shares of investment products related to LUNA. However, they’re hoping the low prices and volatility will recover to resume trading.
2) Crypto Stocks Hit Hard
Like stocks in the wider stock market, crypto stocks experienced brutal hits when the crypto market first fell, but they seemed to start recovering by the end of the week. On Friday, Coinbase rose by 18%, Galaxy Digital Holdings by 14%, and MicroStrategy by 21%. Mining stocks have also done well, including CleanSpark and Hut 8.
This may be a sign that institutional investors recognize that the situation with Luna isn’t necessarily a sign that the whole crypto market is doomed. Still, we’ll see how things continue next week.
3) Trouble for Grayscale Bitcoin Trust
However, not everyone was so fortunate. The Grayscale Bitcoin Trust, the world’s biggest bitcoin fund with more than $26 billion worth of bitcoin, dropped by more than 30% last week. And although Galaxy Digital Holdings stock began to recover, the crypto financial services company announced last week that it’s expecting a loss of $300 million for the first quarter of 2022.
“The blockchain is another potentially disruptive technology we’re bullish on right now in spite of the recent Terra/USDT stablecoin collapse. We like to be early and to buy assets many investors don’t (yet) want. Two ways we’re getting somewhat diversified exposure are BKCH The Global X Blockchain ETF and GDLC The Grayscale Digital Large Cap Fund. BKCH is -61% and GDLC is -52%. We believe in the long-term viability of the space and are strategically adding positions at these discounted levels.”
Richard Archer, Archer Investment Management
4) Brazil’s XP Expands into Crypto
In other news, XP — the biggest brokerage in Brazil — intends to add crypto trading features in June. The crypto offshoot will be called XTAGE and integrate with the rest of XP, which has 3.5 million users and has Nasdaq trading technology. It will focus on bitcoin and ethereum, with the possibility of other cryptocurrencies being added later down the line. Brazil’s most prominent digital bank, Nubank, has also added capabilities to trade bitcoin and ethereum.
5) Nomura Starts Crypto Derivatives Trading
Another piece of good news is that Japanese investment bank Nomura has started trading crypto derivatives, focusing on bitcoin non-deliverable forwards and options. The announcement puts the bank in line with competitors such as Goldman Sachs and JPMorgan, which already offer this feature. Nomura says it will meet customer demand for crypto, although the timing has been unfortunate given market activity.
6) Etherscan and CoinGecko Attacked
Various sites related to crypto data — including Etherscan and CoinGecko — have experienced phishing attacks involving pop-ups that asked users to connect their MetaMask wallets. The attacks seem to come from a domain with the Bored Ape Yacht Club logo of the popular NFT collection, although the website isn’t active. Both platforms are investigating who is behind the attack.
Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.
Tim Thomas has no positions in the stocks, ETFs, mutual funds, forex, cryptocurrencies, or commodities mentioned.
Featured image credit: Pixabay
Tim Thomas was born in Guildford and now lives near Southampton, the UK with his family. Tim started his career in the financial markets and has traded and invested in stocks, options, forex, futures, crypto, and real estate for over 20 years. His website, https://timthomas.co/, is dedicated to teaching swing trading strategies for profits, helping traders reach their wealth and financial freedom goals.