The black week in which the cryptocrash took shape
Two events triggered a crisis in the price of the main cryptocurrencies. Terra’s currency Luna lost 100% of its value.
The cryptocurrency market has had one of the darkest weeks in its history. Over the last few days, the sand castle supported by the main cryptocurrencies has collapsed. The queen has done so, bitcoin, which has lost more than 50% of its entire value in six months. But above all, Luna, the token of the Terra network, has plummeted by almost 100%.
The panic is evident. The avalanche of investors has been lethal, sparking fears of a huge cryptocrash that could take the market by storm. “This has happened for two reasons,” says Herminio Fernández, CEO of EurocoinPay. Coinbase – a cryptocurrency trading platform – presented a dramatic income statement in the first quarter. It lost $400 million, triggering one among investors, especially newbies.
Coinbase results, the beginning
This was compounded by events at Terra. The platform offered a 20% return to anyone who chose to invest in its main asset, Luna. Reality overcame the promise. Terra collapsed under the weight of its own cryptocurrency. “It’s an organised attack to cause their currency to collapse,” says Fernández.
Luna has lost virtually all its value. Its creators tried to save it. “They sold their bitcoins to cope with the drop in value, but failed”, triggering a chain reaction. The sale of Terra’s bitcoins in turn triggered a fall in the price of the popular cryptocurrency, sparking widespread panic across the market.
“This won’t be the first or the last time this happens,” confesses Jon Fatelevich, CEO of Stadioplus. Fatalevich dismisses the crash and insists that in this ecosystem the “less solid” projects fall and drag others down for a while.
A tragedy in Argentina
One of the biggest victims of this crisis is to be found in those countries with the most devalued currencies. “In Argentina, where every year the peso devalues by 30% and the government makes it difficult to access the dollar, many people put all their savings in this type of asset. Now they have lost everything,” says Jon from Stadioplus, who asks, “whose fault is it: the investors, those who designed these cryptocurrencies or the governments that force citizens to invest all their money in this asset?
I met bitcoin at 60 dollars
Herminio Fernández, CEO of EurocoinPay
In fact, over the past few hours, many fingers have been pointed at novice investors as the culprits of the panic. Ignorance means that many newcomers to this community do not understand that volatility is very much part of the DNA of cryptocurrencies. Even in the most robust cases. “I first saw bitcoin at 60 dollars, then it went to 300, from there to 90, then to 1,600, then back to 300”, says Herminio Fernández, who recalls that – in 2021 – this asset peaked at 67,000 euros. José Manuel Arnáiz Ceo and co-founder of Seacoast plays down the importance, “The Nasdaq has fallen, as has the S&P 500 and the euro-dollar. This is the same, cryptocurrencies are now part of mainstream finance”.
Looking ahead, experts recommend not unwinding positions and remind that to enter this market you must be willing to lose. “If the amount you have in games can bring you problems, it is better to sell and leave the profits obtained in the investment,” says the expert in digital currencies. “To invest you need to know a bit, it’s not that simple,” says the co-founder of Seacoast.
The best thing to do is not to panic and to be patient. But above all, don’t fall into traps. “Make sure you don’t invest in a scam or spoofed network, because social networks are full of them,” says EurocoinPay. “We are living very exaggerated highs and lows, but the real change that is taking place is that of society,” says Arnáiz.
Source: eldebate.com
Disclaimer: The information set out herein should not be taken as financial advice or investment recommendations. All investments and trading involve risk and it is the responsibility of each individual to do their due diligence before making any investment decision.