Crypto Crash: Here’s Everything You Need to Know
23 May 22
Turns out, the all-mighty Bitcoin isn’t unbreakable. Bitcoin, along with other major players in the market, has showed a steep decline in the past few weeks. With Bitcoin losing over 50% of its value and Luna losing a whopping 97%, many investors have lost a large chunk of their life’s savings.
But what happened? Sadly, we can’t point a finger at just one person or event. The plummet was the result of several factors, not the least of which is the world’s current economic and geopolitical instability. Notably, the federal reserve recently raised its interest rates, which is when the crypto market began to gradually decline. The crypto market has also always been closely related to the stock market, and with the S&P showing signs of decline, it’s expected for crypto to follow suit.
TerraUSD (UST) was the first coin to take a tumble. Prior to its crash, The Luna Foundation Guard (LFG) purchased 125 million dollars worth of Bitcoin with hopes of saving UST and its peg to the US dollar. This attempt was clearly unsuccessful and UST crashed to an all-time low, taking its sister coin Luna along with it.
Because of how dependent UST was on Bitcoin, the crypto giant also took a tumble. Although Bitcoin didn’t experience such a sharp drop, it has left many investors devastated, and it’s fair to say that people won’t be so trusting of Bitcoin and other cryptocurrencies in the future.
As devastating as this crash may be, it shouldn’t come as a shock. Such incidences only emphasize the importance of diversifying your portfolio and not putting all of your eggs in one basket.