Crypto investors are at the point where they are wondering just how bad the current cryptocurrency market crash can be. Even bitcoin has now lost its major support and could be headed down to around 20k.
Only around 7 months ago crypto was riding strong. The combined market cap for this new asset class had just tipped $3 trillion, perhaps a third of the gold market, and the technology that crypto brought with it was seen as groundbreaking, and perhaps every bit as disruptive as when the internet came along.
Seven short months later and the whole cryptocurrency industry is heading downwards in price at breakneck speed. The velocity of the collapse has been such that it has caught many by surprise, probably including the large investment companies that were backing many of the projects within the crypto industry.
Bitcoin, the granddaddy of cryptos, and the one that has probably held up better than any other, started its rapid descent only a week ago. In just 7 days, the asset has plunged from $48,000 to its current price level of around $28,000, and has been as low as under $27,000 earlier today.
Losing $20,000 per bitcoin in just a week sounds pretty bad, but the worst disaster for the cryptocurrency sector has undoubtedly been the total and utter collapse of the UST stablecoin, LUNA, the token that is burnt or minted to help UST keep its peg, and the entire Terra ecosystem behind them.
UST is currently hovering at around 55 cents, while LUNA has plummeted from $97 to 5 cents in just 3 days, wiping off many billions from the portfolios of the institutions and retail investors who were backing the ecosystem.
Absorbing such a loss is arguably going to take crypto a long time to achieve, and it has accelerated the bearish momentum across the entire industry. How far down we go from here is anyone’s guess.
What is required now is for the stock market to start making a recovery. Given the current geopolitical tensions, and the weakness of the global economy in general, things are looking increasingly uncertain.
Institutions and experienced traders are said to be relishing the thought of bitcoin going down to sub $20k levels so that they can “buy the dip”. However, for the average retail investor it’s a wipe-out, and many may be limping away from this particular car crash for good.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.