This Week in Pieces: Virtually All Top 100 Cryptocurrencies Sink as LUNA Hits Bottom

This week in parts. Illustration by Mitchell Preffer for Decrypt

A quick glance at the Decrypt This week’s homepage would have been enough to see that the global crypto industry is a hive of panic.

Crypto’s Craziest Week seen from 200 billion dollars of total market capitalization evaporate between Wednesday and Thursday, while industry leaders Bitcoin and Ethereum crashed not seen since 2020putting institutional whales like Elon Musk and Michael Saylor back under water. Additionally, according to Huobi analysts, we haven’t reached the bottom.

Terra’s main cryptocurrency, LUNA – last week one of the top 10 in the world –dropped to zero. LUNA posted an all-time high of $118.19 just last month, and it is now trading for a fraction of a penny.

LUNA’s disappearance was caused by the collapse of Terra’s other flagship coin, the greenback-pegged UST, which hit a low of 13 cents on Friday, according to CoinMarketCap. It has risen slightly today to 19 cents, at the time of this writing.

The numbers of the week

It is now the sixth consecutive week market decline as virtually all of the top 100 cryptocurrencies by market capitalization start the weekend with double-digit percentages. Bitcoin is down 20% from last week, trading at $28,809, and Ethereum is down 27% to $1,968.

Among the biggest losers of the week: Cosmos fell 43% to $9.68, Algorand fell 43% to $0.42, NEAR Protocol fell 43% to $6.05, Polygon fell 40% to $0.62 and Avalanche fell 48% to $29.83.

The only coin in the top 100 that gained this week was Maker, the 42nd largest cryptocurrency by market cap at $1.4 billion, which rose 7.1% to $1,419.

News of the week

Terra’s collapse aside, the news cycle continued as much as it has in recent months, albeit with increased discussion of stablecoin regulations.

On Monday, Instagram announced that it was testing NFT Connectivity with a handful of US-based collectors and designers. The pilot allows testers to link crypto wallets to their accounts and view verified collectibles. Parent company Meta also said that Facebook NFT support is expected soon.

Economist and former non-coinmaker Nouriel Roubini has started work on a dollar-pegged, inflation-resistant stablecoin, according to a Bloomberg report Monday. Roubini’s Atlas Capital tapped Andreessen Horowitz-backed Web3 developer Mysten Labs to develop the technology for the United Sovereign Governance Gold Optimized dollar.” The project is a complete turnaround for Roubini, who in 2018 gave a 37-page speech calling crypto the “Mother of all scams.”

Also on Monday, Salvadoran dictator Nayyib Bukele bought 500 BTC for around $15.3 million. This brought the total number of El Salvador’s Bitcoin reserve to 2,300, or about $66 million, currently $6.25 million (9%) less than its value when Decrypt reported the purchase. In total, Bukele is 37 million dollars in the hole today.

On Tuesday, Treasury Secretary Janet Yellen pointed to Terra’s collapse as an example of why stablecoins need to be regulated urgently. On Thursday, Yellen mentioned crypto again, this time to say that the industry’s $1.23 trillion market capitalization poses no systemic risk to the US financial system, and by extension, neither do stablecoins,”but they grow very fast and present the same type of risks that we have known for centuries because of bank runs.

Security and Exchange Commission President Gary Gensler issued strong criticism when trading cryptocurrency and stablecoins during an interview with Bloomberg tuesday. Disputing that many major exchanges run custody, market making and trading services without separating them like traditional exchanges are required to do, Gensler accused them of “trading against their clients often because they mark the market against their customers”.

On the same day, the German Federal Ministry of Finance (BMF) published the first tips on the tax treatment of cryptocurrencies. Parliamentary State Secretary Katja Hessel said in A declaration that selling cryptocurrencies like Bitcoin or Ethereum is now tax exempt for individuals after one year of holding the assets.

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