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Terra 2.0: This is What LUNA Holders Need to Know

Over the past couple of weeks, the crypto world was shaken by the sudden collapse of the Terra ecosystem. After its algorithmic stablecoin (UST) lost its dollar parity, everything came crashing down, leaving many investors with nothing as LUNA quite literally went to $0.

Now, the community has voted and accepted a proposal that would essentially see the fork of a new chain but with many changes. Let’s unpack.

A Quick Roundup

On May 9th, the algorithmic stablecoin built on top of the Terra protocol and a driving force behind its entire ecosystem – UST – lost its peg. A couple of days later, it was already trading at around $0.30 – a whopping 70% below its intended value of $1.

Because of how the algorithm works, this provided for a tremendous arbitrage opportunity where traders were able to redeem 1 UST (trading below $1) for $1 worth of LUNA. This design was intended to destroy the UST and reduce its supply which, in turn, should have increased its value. The selling pressure, however, was tremendous, and UST never came close to its $1 peg.

This allowed traders to print LUNA in excess, creating a massive supply of over 6 trillion LUNA in a couple of days. Needless to say, this kind of supply expansion in this short time frame with no possible way to absorb it led to the inevitable – LUNA’s price crashed to $0.

The entire Terra ecosystem was wiped out and saw billions disappear from the market in less than a week in an event that will forever echo in the chambers of crypto history.

luna_cover (1)

Terra 2.0 is Born: No Algorithmic Stablecoins This Time

Arguing that “Terra is not just UST,” protocol founder and CEO – Do Kwon – came up with a revival plan. Without going into the details of how the plan changed over the course of a few weeks, the Terra community and validators voted and accepted the proposition, and the tone was set.

The vote for the final proposition ended on May 25th. 65.5% of those who voted approved the proposition, 20.98% abstained from voting, and 13.20% rejected it.

Called Terra Ecosystem Revival Plan 2the plan aims to see the creation of a new Terra chain that won’t have an algorithmic stablecoin. The old chain will be called Terra Classic, and its LUNA will carry the ticker LUNC. The new chain’s token will be called LUNA.

At the time of this writing, multiple exchanges have attested support for the project. These include:

  • Huobi
  • Kucoin
  • Bitrue
  • FTX
  • Bitfinex
  • GateIO
  • Bybit
  • Binance

Commenting on the matter, the leading exchange by means of trading volume – Binance – stated:

The Terra community just passed a vote to “Rebirth Terra NEtwork.” We are working closely with the Terra team on the recovery plan, aiming to provide impacted users on Binance with the best possible treatment. Stay tuned for further updates.

In a sum-up, the proposal also includes details on essential app developers of the ecosystem, as well as how LUNA will be airdropped across LUNA classic stakers, holders, UST residual holders, and app developers.

LUNA Airdrop: How Much Will You Get?

Undoubtedly, one of the hottest topics is the incoming LUNA airdrop and the way it’s distributed to LUNC token holders.

To sum it up, this is what the distribution looks like:

  • Community pool – 30%
  • Pre-attack LUNA holders: 35%
  • Pre-attack aUST holders – 10%
  • Post-attack LUNA holders – 10%
  • Post-attack UST holders – 15%.

In addition, the wallet of Terraform Labs (TFL) will be removed from the whitelist for the airdrop, which is intend to make “Terra a fully community-owned chain.”

All tokens will have an initial unlock and a vesting schedule that’s different based on a pre-determined set of criteria. It can be found here.

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Bitcoin Dormant at $30K While Ethereum Classic (ETC) Pumps 10%: Market Watch

Bitcoin recovered most losses from yesterday’s dip below $29,000 but failed at $30,000 once again. The altcoins have continued to trade sideways with a few notable moves in either direction. Ethereum Classic stands out as the most significant gainer.

Bitcoin Back Below $30K

The primary cryptocurrency has had its issues with the coveted $30,000 line for over a week now. It made several attempts to overcome that line but was met with rejection every single time, which pushed it south by up to a few thousand dollars almost immediately.

The latest such example came earlier this week when BTC pumped to $30,600. The same scenario followed, and the asset plummeted by precisely $2,000 to a low of $28,600.

Nevertheless, the bulls stepped up and drove it upwards once again. For a brief moment, BTC surpassed $30,000 once again but now stands just under it.

As such, its market capitalization has gone back down to $565 billion, while the dominance over the altcoins has increased slightly to 44.7% on CoinMarketCap.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

ETC Stands Out

The altcoins have calmed as well recently. Ethereum, for example, has followed bitcoin’s price movements to a large extent. ETH’s major line that it fails to overcome decisively is $2,000.

It jumped above that level two days ago but dipped below it yesterday and has remained there now as well after a minor daily retracement. Ripple, Cardano, Solana, Dogecoin, Avalanche, and Shiba Inu are also slightly in the red.

Binance Coin has sustained above $330 following a minor increase. Tron has jumped the most from the larger-cap altcoins, with a 4.4% pump to $0.08.

While most lower- and mid-cap altcoins are in the red as well, Ethereum Classic has defied the odds with a 10% increase in a day. Consequently, ETC now stands close to $25. The crypto market cap has stalled below $1.3 trillion.

Cryptocurrency Market Overview. Source: Quantify Crypto
Cryptocurrency Market Overview. Source: Quantify Crypto
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Market Watch: Bitcoin Reclaims $30K, LUNA Recovers 12%

Following the relatively calm weekend, bitcoin finally initiated an impressive leg up and jumped above $30,000. Most altcoins are also well in the green, with ETH standing north of $2,000 and BNB charting a new two-week high.

Bitcoin Reclaims $30K

The past seven days were substantially less volatile than the previous week, in which BTC dumped by $15,000 at one point. In the past week or so, the asset remained primarily around the $30,000 mark, with several attempts to decisively overcome that level but with little-to-no success.

The most significant leg up came on May 16 when BTC spiked to above $31,000 but was quickly stopped in its tracks and retraced by over $2,000 in hours.

This scenario repeated a few more times, with the latest one on Friday – after that rejection, bitcoin slumped below $29,000. The cryptocurrency spent the weekend trading mostly sideways and failed to challenge $30,000.

However, this happened late last night when BTC went on the offensive and jumped to an intraday high of over $30,500. As such, its market capitalization has increased to about $580 billion.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

ETH Above $2K, BNB Marks Local Peak

The altcoins were also quite calm during the weekend, but most have turned green today. Ethereum leads the way as the second-largest crypto has reclaimed $2,000 and even neared $2,100 after a 5% daily increase.

A similar pump has pushed BNB to $330, which is the highest price point seen by the asset since May 10. Even more impressive gains are evident from Solana, Avalanche, and Shiba Inu.

Although more modest, Ripple, Cardano, Polkadot, Dogecoin, and Tron are in the green as well.

Terra’s two controversial cryptocurrencies – UST and LUNA – have pumped in the past 24 hours as well but are still miles away from their prices visible two weeks ago.

Ultimately, the crypto market cap has added over $50 billion in a day, and the metric is now above $1.3 trillion.

Cryptocurrency Market Overview. Source: Quantify Crypto
Cryptocurrency Market Overview. Source: Quantify Crypto
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The Terra (LUNA) Collapse: 4 Lessons To Be Learned (Opinion)

As the stormy waters recede from this month’s crypto market bloodbath, one blockchain network has been washed ashore dead: Terra.

The network’s co-founder, Do Kwon, has forfeited any attempt at restoring the current chain to its former glory. He’s now advocating to hard fork and start anew with a different cryptocurrency – a highly questionable approach with no guarantees of recovering value to harmed investors.

What’s certain, however, is that neither TerraUSD (UST) nor the LUNA governance token will ever recover. The former now trades over 90% down from its intended dollar peg, while the latter has arguably suffered the most explosive and sudden collapse in the history of currency.

Financial implosions of this magnitude are virtually unheard of – even in crypto. How could the billions of dollars stored within such a widely supported protocol utterly evaporate within a week – not least from a so-called “stablecoin”?

Now would be a good time for the entire crypto community to re-examine its assumptions about stablecoins, investing, and developers alike. Here a five valuable lessons we can glean from the corpse left behind by the Terra network.

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From $100 to zero in days, LUNA. Source: TradingView

1. Stable Assets Require Stable Reserves

Stablecoins are designed to provide the best of both the new and old financial worlds: the decentralization and speed of cryptocurrency and the value stability of fiat currency.

However, the most successful stablecoins available right now don’t use an entirely “decentralized” model. Tether (USDT) value backs its stablecoin with non-decentralized, highly liquid, stable reserve assets (commercial paper, treasury bills, etc.). These reserves must be regularly audited by private companies to ensure that USDT is indeed fully backed and convertible.

TerraUSD, however, was an algorithmic stablecoin. It followed an alternative model whereby the token was programmatically backed by cryptocurrency – specifically LUNA – instead of dollars.

Any UST holder could redeem their stablecoin for one dollar worth of freshly minted LUNA at any time. Conversely, LUNA holders could always burn their holdings in return for a UST count equal to the exact dollar value of LUNA burned. This mechanism created stabilizing arbitrage incentives similar to USDT so that the market price of the stablecoin could always redirect back to one dollar.

However, unlike USDT, the asset “backing” UST was not nearly so stable nor liquid as actual dollars. In other words, if many UST holders were to redeem their holdings at once, the value of LUNA could significantly decline after exchanges were flooded with excess supply.

This is, unfortunately, the exact scenario that took place this month after wealthy UST holders commenced a short attack against the stablecoin. Investors were incentivized to redeem their UST holdings for LUNA en masse, hence creating an oversupply of the token. The result was a death spiral whereby the value and credibility of both UST and LUNA crumbled to nothing.

This phenomenon likely would have been prevented if UST was backed by an asset with a deeper market and less shaky value under pressure.

2. Buy Value, Not Hype

Just because something has a high market value doesn’t mean it’s a reliable investment. Do not rely on the “wisdom” of the greedy, bullish mob to tell you where your money should go. Do your own research.

This point cannot be stressed enough. In retrospect, Terra collapsed due to a flawed stabilization mechanism open for all to examine and scrutinize from its outset. In fact, previous coins with similar stabilization models had already been tried – and failed – many years ago.

Such details didn’t matter much to most investors – nor did the unusually high 20% yield offered to UST holders through Anchor protocol. When given the opportunity to escape the flood before it happened, thousands of investors failed to use due diligence.

Even trusted billionaires across the crypto community aped into Terra without a second thought, inspiring more to follow. Mike Novogratz, who had a LUNA-themed Tattoo emblazoned across his arm in January, now calls the artwork “a constant reminder that venture investing requires humility.”

This month’s events prove that even experienced investors know little more about what’s safe in crypto than you do. They should not be relied upon.

As the Bitcoiners say: Don’t trust; Verify.

3. Crypto Isn’t All “Decentralized”

Terra’s devs pedaled a lot of hype about creating “decentralized money” for a “decentralized economy.” But when push came to shove, the community revealed its highly centralized and opaque governance structure underneath.

Between Do Kwon, Terraform Labs, and the Luna Foundation Guard (LFG), the average user held virtually no power during Terra’s final moments. The aforementioned parties made numerous hasty and monumental decisions in an attempt to rescue the network – all of which failed anyhow.

For example, on May 9th, Do Kwon and merely six other members of the LFG voted to deploy $1.5 billion from its reserve pool to defend the value of UST. The Guard then left the community with no updates until May 16th, when it explained that virtually all reserve assets – including 80,000 BTC – had been sold.

dokwon
Do Kwon, Terra’s Founder

Furthermore, on May 12th, Terraform Labs collaborated with validators behind the scenes to freeze the Terra blockchain without warning. This was done without community consent – ironically with the stated goal to “prevent governance attacks.” For context, Terra’s chain only has 130 validators.

Even Do Kwon himself retweeted a post stating that the LFG was indeed a centralized system (which he planned to transition away from in time).

When it comes to “decentralization,” there’s a difference between “can’t” and “won’t.” If a small party can take control of a blockchain network whenever it deems that control necessary, is it truly decentralized?

4. Stay Humble, Even If You’re Rich

On one hand, it’s in poor taste to kick a man while he’s down – especially when he’s already faced with lawsuits and multi-million dollar fines.

On the other hand, it can be quite entertaining watching companies die – especially when governed by people who were once so brazenly rude and self-assured.

Don’t take it from me. Take it from Do Kwon himself. Mere days prior to Terra’s meltdown, he spoke with a popular streamer about the crypto industry, claiming there would be “entertainment” in watching 95% of industry startups die over time.

This was no lighthearted joke but a dangerous demonstration of self-certainty and condescension towards Kwon’s competitors and critics. This was made clear in the days to come when Kwon publicly attacked multiple people that tried warning him about his protocol’s security flaws.

“You could listen to CT influensooors about UST depegging for the 69th time, or you could remember they’re all now poor, and go for a run instead,” he tweeted on May 7th.

The following day, Kwon suggested that those fearing a UST de-peg would be “waiting until the age of men expires.”

Yet the worst of Kwon’s behavior was at the height of crypto’s bull market in November. When a Twitter user-outlined a process by which he predicted Terra would fall due to a short attack, the co-founder called it “the most retarded thread” he’d read this decade. He then deemed the user “stupid” and invited his “billionaire” followers to try out the attack.

If Terra’s collapse were truly a black swan event, Kwon might have been able to salvage his reputation from its remains. But after repeatedly mocking his critics for being poor, openly inviting whales to short attack the network, and losing a $200 million “bet” on LUNA’s demise… is it any surprise that his followers are short of sympathy?

His actions haven’t affected him alone: for better or worse, Kwon was Terra’s biggest leader. The implicit responsibility of guiding the community out of a crisis has fallen on his shoulders.

But after destroying his own credibility, the crypto scene is largely unwilling to unite behind his last resort hard fork plan. Some even distrust the legitimacy surrounding the ongoing governance vote for his proposal, believing the vote to be rigged.

Whether such claims have any merit is beside the point. Trust is fragile – especially in an industry already rife with scams and bugs. Earning it is an uphill battle, and losing it is as easy as a few stupid tweets.

Conclusion: Learn Now, Not Later

Crypto is home to a potential revolution in financial innovation. It also suffers from a gross lack of regulation, market manipulation, hacks, thefts, anonymity, lack of transparency, and a reckless FOMO culture.

The investors whom you think know what they’re buying do not, in fact, know much more about crypto than you do. The developers who assured you that everything was under control could not, in reality, control the market around their stablecoin.

Take what you can learn from Terra’s failure, and see if you can understand the inner workings of your other crypto investments a little bit better. Nobody is doing the learning for you, and likewise, nobody will save you if those investments fall apart.

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Market Watch: Bitcoin Below $30K, About to Close 8 Consecutive Week in Red

Despite challenging $30,000 yesterday at one point, bitcoin was unable to overcome it and remains stuck below that line. Most altcoins are quite calm on a daily scale, with a minor increase from BNB and a more substantial jump from NEAR Protocol.

Bitcoin Stands Still Below $30K

Last week was a highly emotional and fluctuating roller-coaster in which BTC slumped by $15,000 at one point and bottomed at $25,300. This week turned out to be calmer, but the asset is on the doorsteps of yet another weekly red candle.

Back on May 16, the cryptocurrency spiked to a multi-day high of over $31,000. Despite failing there at first, it took another swing the next day but was rejected once more.

The retracement pushed it south to below $29,000, but then the bulls stepped up once more and drove it upwards by $2,000. Yet, a familiar scenario followed, and BTC found itself dipping to $28,750 once again.

Since then, the asset has remained stuck below $30,000 despite recovering several hundred dollars. As such, its market cap sits still at $560 billion, and its dominance over the alts is at 44.5%.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

BNB and NEAR Lead the Race

The altcoins have remained untypically calm today, with little-to-no substantial movements from most. Ethereum lost the $2,000 mark yesterday and sits below it as of now as well.

Ripple and Avalanche are slightly in the red, while Solana, Cardano, Polkadot, and Dogecoin have painted minor increases.

Binance Coin has gained the most from the larger-cap alts with a 3% jump. Consequently, BNB sits at a multi-day high of $315.

NEAR Protocol is up by 5.5% on a daily scale and has reclaimed $6. Stellar, Theta Fuel, and The Sandbox are also in the green.

Somewhat expectedly, the crypto market cap is relatively calm as well and stands at $1.260 trillion.

Cryptocurrency Market Overview. Source: Quantify Crypto
Cryptocurrency Market Overview. Source: Quantify Crypto
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Bitcoin’s Pizza 12th Anniversary: 2 Pizzas for 10,000 BTC

On May 22, the cryptocurrency community celebrates international Bitcoin Pizza Day. Less than two years after Satoshi Nakamoto published the nine-page Bitcoin whitepaper, Laszlo Hanyecz legitimized the use of cryptocurrency with the purchase of two pizzas for 10,000 BTC.

Bitcoin Pizza Day

There are thousands of cryptocurrencies, but Bitcoin, even to this day, remains an undeniably ingenious manifestation of blockchain technology. From modest beginnings to a trillion-dollar market cap, Bitcoin has stood the test of time. Laszlo Hanyecz was indeed one of the early contributors responsible for what many consider a fundamental marketing masterpiece for Bitcoin adoption.

In the initial days, there weren’t any reliable venues where Bitcoin trades can be conducted. Instead, BTC was traded via direct communication through discussion boards and Internet Relay Chat rooms. This was the time when the cryptocurrency, helmed as an experimental technology, was worth only a few cents.

The Florida-based programmer, Hanyecz, went on to become the first person to use Bitcoin in a commercial transaction after paying 10,000 BTC for two Papa John’s pizzas on May 22, 2010. At the time of purchase, Bitcoin was worth $41. Today, 10,000 BTC would today cost around $300 million.

Beyond Pizza Purchases

Laszlo Hanyecz is more than just “that guy” who bought Pizzas with 10,000 BTC that the internet loves to sensationalize. In honor of Bitcoin Pizza Day, let’s look into his groundbreaking contributions beyond the pizza purchase.

Apart from fixing many vulnerabilities during the early stages of the network, Hanyecz was also the first developer to release the Bitcoin code for Mac OS.

He also transformed the Bitcoin mining landscape. Much before the onset of application-specific integrated chips (ASICs), Bitcoin was being mined using CPU.

The transition to GPU mining didn’t happen until Hanyecz developed a mining code that enabled miners to mine BTC using their graphics cards [GPUs]. At that time, even Satoshi Nakamoto, who had frequently exchanged several messages with him, thought that introducing GPU mining was too advanced for Bitcoin’s development.

Bitcoin has managed to capture of imagination of many industry stalwarts, but it’s time the community recognizes the commitment and efforts of the many Bitcoin OGs, including Hanyecz, who helped the digital asset become what it is today.

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Record Inflation Rates Spread Worldwide, Could Crypto Ease Some of the Pain? (Op-ed)

The condition of the global economy seems to be in a state of knockdown. The years of financial boom after the crisis in 2008 ended with the outbreak of the COVID-19 pandemic at the beginning of 2020. Social distancing measures and “stay-at-home” rules crippled production to a serious extent, while numerous central banks took the decision to print colossal amounts of fiat currencies in an attempt to patch economic holes.

Two years later, the move (combined with the Russia-Ukraine war and its financial consequences, among other economic distress, such as supply chain issues, soaring demand, and production costs) caused inflation rates to spike in many countries. In March, the inflation in Turkey hit a year-over-year record high of 61.1%. Nations like the US and the UK also suffered severely.

When the inflation rates were galloping that much during the 80s, most people invested their depreciating fiat currencies into something that could keep its value in the future, such as real estate or gold. Nowadays, though, we have cryptocurrencies, and some residents of the affected countries already seem interested in diversifying with the asset class.

Leading Economies Take a Major Inflation Punch

When observing the financial crisis worldwide, it is worth starting with the strongest economy – the United States of America. In April this year, the Consumer Price Index (CPI) clocked in at 8.5%, a record high for the last 40 years.

The reasons behind the negative statistics could be the Federal Reserve’s decision to print trillions of dollars during the coronavirus pandemic and the soaring electricity and gas prices due to the military conflict between Russia and Ukraine.

But it’s not all that simple, as the issues started well before the war in Europe. Supply chain problems were already harming the local (and global) economy and were only exacerbated in the past few months. Raw materials and labor are harder to find, leading to fewer products made and lower inventories, while the demand has remained the same or maybe even increased.

The effects are more than visible. And while transport, shelter, food, and all other costs soar daily, people’s salaries take time to reach the necessary level to cope with the turbulence. As such, many individuals started looking for solutions, and those who had the experience and financial capabilities distributed part of their wealth into precious metals, properties, bonds, stocks, and digital assets.

Numerous financial experts and crypto proponents describe bitcoin as the digital version of gold and a successful hedge against inflation. Paul Tudor Jones, Ray Dalio, and Jordan Peterson are some examples. The narrative that BTC could serve as an appropriate anti-inflation tool comes from its limited supply (only 21 million coins ever to exist), accessibility, and decentralization (it is not printed or controlled by central banks).

The accessibility feature is particularly interesting as some of the aforementioned assets typically regarded as safe havens are not as easy to access as BTC. All users have to do to get on the bitcoin blockchain is access to the Internet, and, if they choose to go through centralized exchanges, they can create accounts and be verified rather quickly. Investors could also purchase very small quantities of BTC (they don’t need to buy a whole one).

Weighing in on the matter, bitcoin bull Michael Saylor recently argued that the inflation rate in the US is actually higher than what authorities announced, advising people to seek shelter in the primary digital asset.

The next country where inflation reached a 40-year peak is the United Kingdom. Apart from the reasons mentioned above, the local crisis was fueled by the nation’s withdrawal from the European Union, a move known as Brexit. Experts expect that it is likely to increase the cost of living in the UK due to its interrupted financial connections with the rest of Europe.

A recent Coinbase report revealed that crypto adoption in the UK is on the rise as 33% of Britons have already dived into the asset class. Bitcoin and ether are the most commonly owned, while Dogecoin and Binance Coin round up the top 4.

Record Inflation Reigns in Other Countries

In April, the largest country by landmass in South America – Brazil – marked the steepest rise in the inflation rate for a single month when the consumer price index IPCA rose from 11.04% in March to 12.1% 30 days later.

In light of the financial turbulence, according to Gemini’s survey, Brazilians are the global leader in crypto adoption, as 41% of the participants admitted owning bitcoin or altcoins.

The inflation rate in Nigeria is also heading north each month, and currently, it is over 16%. Interestingly, KuCoin estimated that one of the financial hubs in Africa has over 33 million crypto investors (35% of those aged 18 to 60). Apart from inflation fears, a huge proportion of Nigerians distribute their wealth into the cryptocurrency market because they have limited access to financial services.

Despite the negative trend in all these countries, the inflationary crisis appears to be even worse in Turkey. At the end of last year, the country’s national fiat currency – the Turkish lira – lost a significant chunk of its value against the American dollar. Many blamed President Erdogan, whose controversial policies might have led to the sharp drop.

In March this year, the inflation rate in Turkey surpassed 60% (a year-over-year). Gold remains the most important and widely employed investment instrument in the country, but there could be an issue with this as the authoritative government urged the population to turn over its precious metal holdings to help support the economy.

At the same time, locals are gradually shifting their focus toward bitcoin and even Tether, which, since it’s pegged 1:1 with the USD, allows people to purchase the closest available option of the greenback but on the blockchain.

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Weekend Watch: BTC Rejected at $30K, LUNA and UST Dump Another 20%

After reaching and briefly exceeding $30,000 yesterday, bitcoin was rejected and dropped by more than a grand. Most altcoins are also slightly in the red today, with ETH struggling beneath $2,000 and SOL down to $50. LUNA and UST continue to lose value.

Bitcoin Rejected at $30K

Ever since last week’s massacre, bitcoin has been unable to decisively overcome the coveted $30,000 level. In the past several days, it made numerous attempts but was halted in its tracks after each.

On May 16 and 17, BTC even spiked to $31,000 but was stopped on both occasions and fell back down to a familiar level. On May 19, the cryptocurrency dropped below $29,000, where the bulls stepped up and didn’t allow any further declines.

Just the opposite, bitcoin went on the offensive and jumped by $2,000 in a day to a daily high of $30,750 yesterday. However, the generally bearish market state resulted in another rejection, and BTC dumped by $2,000 in hours.

After bouncing off at $28,750 (on Bitstamp), bitcoin jumped above $29,000, where it’s currently situated as well. As such, its market cap has declined slightly to $560 billion, and the dominance over the alts is at 44.6%.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

ETH Below $2K, UST, LUNA Keep Plunging

The alternative coins have largely mimicked BTC’s performance as of late, and the past 24 hours brought some minor declines again.

Ethereum traded above $2,000 yesterday, but a 2.5% decrease has driven the second-largest cryptocurrency to just under that level as of now.

Binance Coin sustains above $300, and Cardano is north of $0.50 after insignificant daily retracements. In contrast, RIpple, Solana, and TRON have lost more value. Polkadot, Dogecoin, Avalanche, and Shiba Inu are also slightly in the red.

The never-ending drama surrounding Terra‘s two native cryptocurrencies continues, as both LUNA and UST have dropped by another 20% in the past 24 hours.

Ultimately, the crypto market cap is down to $1.250 trillion after touching $1.3 trillion yesterday.

Cryptocurrency Market Overview. Source: Quantify Crypto
Cryptocurrency Market Overview. Source: Quantify Crypto
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Bitcoin Correlation to Wall Street Persists, Market Calms Down Following Terra Demise: This Week’s Crypto Recap

In the wake of Terra’s devastating collapse, the cryptocurrency market is taking a shot at recovery. In the past seven days, the total capitalization is up to $1.350 trillion, gaining roughly around $70 billion. Most cryptocurrencies trade well in the green, so let’s unpack.

Starting with Bitcoin, the cryptocurrency seems rangebound between $28K and $30K. At the time of this writing, it trades slightly above the latter on shaky volume where buyers appear indecisive. Bulls attempted a more convincing attempt to push the price forward and even brought it above $31K. Unfortunately, their push was for not, as sellers interrupted the advance and pushed BTC back towards $29K.

The price action of Bitcoin and of most altcoins, for that matter, can be categorized as an unfavorable chop where a direction is yet to be convincingly determined.

Speaking of altcoins, most of the top one’s trade will in the green. Ethereum is up 3.8% over the past seven days, and BNB gained 16.4% – the same as Solana. The largest weekly gainer seems to be Decentraland’s MANA, that’s up a whopping 56%, followed by KuCoin’s native token – KCS (up 43%). On the other end of the spectrum, we have LUNA and UST (not surprisingly) – down 88% and 81%, respectively.

Elsewhere, Wall Street also saw a week full of tumultuous and unconvincing price action where major indices shed some value. The S&P 500 is down 2.55% since Monday, while the DJI is down 2.69%. Correlation between traditional markets and crypto remains at multi-month highs, which indicates that the relatively new industry continues to be completely unable to decouple.

It’s been a calmer week compared to the last one, but it’s undoubtedly very exciting to see what the next seven days have in store.

Market Data

Market Cap: $1,341B | 24H Vol: $88B | BTC Dominance: 42.8%

BTC: $30,151 (+3.5%) | ETH: $2,029 (+3.2%) | ADA: $0.52 (+11.2%)

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This Week’s Crypto Headlines You Can’t Miss

First Time in History: Bitcoin Closes in Red 7 Consecutive Weeks. For the first time ever, Bitcoin’s price closed seven consecutive weeks in the red. This also pushed the overall market sentiment into extreme fear. In fact, the metric dropped to a low that we hadn’t seen since the COVID crash in March 2020.

Global Watchdogs to Regulate Stablecoins Following TerraUSD (UST) Fiasco. The sudden collapse of the entire ecosystem of the Terra protocol wreaked havoc on the broader cryptocurrency market. This, in turn, caused global regulators to consider taking steps to regulate stablecoins.

The High Bitcoin and Ethereum Correlation With Wall Street Continues. The decline within the cryptocurrency field in recent weeks hasn’t been an isolated event – in fact, it followed the broader stock market. Data shows that the correlation between the two is currently at a multi-month high.

SEC Chair Predicts Other Cryptocurrencies Will Mimic Terra’s Downfall and Harm Investors. The Chairman of the United States Securities and Exchange Commission (SEC) – Gary Gensler – thinks that there might be more cryptocurrencies like LUNA that will collapse in the near future. This would, in turn, harm more investors the way many people were burned throughout the Terra fiasco.

FTX US Launches Stock Trading for Select Users. One of the leading cryptocurrency exchanges – FTX – revealed its latest expansion intentions. The company aims to allow users to trade stocks aside from just cryptocurrencies, and they’ve already launched the service, which is only available to select traders.

Bitcoin is the Internet’s Only Money, Jack Dorsey Says. The former CEO of Twitter and current chief of financial services company – Block – Jack Dorsey, said that Bitcoin is the only money for the internet. The tech mogul and multi-billionaire has long been a BTC bull, and his latest comments further cement his position.

Charts

This week we have a chart analysis of Ethereum, Ripple, Cardano, Solana, and Polkadot – click here for the full price analysis.

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Vitalik Buterin Confirms Ethereum’s Merge Could Happen in August

Arguably the most anticipated event in Ethereum’s 7-year-old history could come in the next few months, asserted the project’s co-founder as well as a couple of core ETH developers. This should happen before the “difficulty bomb” slows down the network.

  • Speaking at a panel during the Permissionless conference, ETH core developer Preston Van Loon noted that The Merge could occur sometime in August:

“As far as we know, if everything goes to plan, August – it just makes sense. If we don’t have to move (the difficulty bomb), let’s do it as soon as we can.”

  • The difficulty bomb is an intentional process embedded into Ethereum’s code that will eventually slow down the network. The dev team incorporated it for two main reasons – to encourage developers to push the proof of stake transition and make it harder for miners to remain on the proof of work chain following the event.
  • Although the difficulty bomb has been postponed several times in the past to make sure the network continues to function correctly, the team wants to avoid another delay this time and complete The Merge before the blockchain slows down.
  • Previously, another developer – Tim Beiko – said The Merge will not happen in June as expected, but it will most likely occur a few months later.
  • Further echoing Van Loon’s encouraging words, ETH researcher Justin Drake made a similar prediction, saying he had a “strong desire to make this happen before difficulty bomb in August.”
  • Vitalik Buterin also reiterated this stance during the ETH Shanghai Summit but also gave more room for potential hiccups, saying The Merge could be in September or October.
  • The Ethereum blockchain marked a new milestone on its way to PoS recently as the Ropsten public testnet was announced to complete The Merge in early June.