The value of bitcoin has fallen by more than half since its peak in November 2021, causing the entire cryptocurrency market to collapse. Terra (LUNA) and TerraUSD (UST) have seen such a sharp decline that investors may be concerned. If these two cryptocurrencies were enjoying their honeymoon a month ago, who would have thought they would face such a severe fall? Weak sentiment, which spread to the crypt market, led investors to withdraw their money, causing Tether (USDT) to lose its bond with the dollar.



This week has not only taught investors to invest hard, but has also dispelled many myths about the cryptocurrency market. Bitcoin may not be the best gateway against inflation

The crypto market has been operating in line with the stock market in recent months. The correlation between bitcoin and the S&P 500 index reached a 17-month high in March 2022, suggesting that the crypto and stock markets are moving in the same direction. did you know how do savings bonds work read this article?



Bitcoin has always been considered a good hedge against inflation. This means that inflation does not affect the highest cryptocurrency. This may not always be true; At least that's what the market is witnessing this week. High inflation and tighter monetary policy also affected cryptoinvestors, which caused the market to collapse. This development shows that Krypto has a larger market today and is becoming more mainstream.



Stablecoins are not always stable



Stablecoins must retain their value. They are covered by fiat currencies such as the US dollar, gold and even other cryptocurrencies. The collapse of bitcoin has seriously affected Terra and TerraUSD. Terry's job is to blame.





Terra (LUNA) and TerraUSD (UST) are two national tokens in the Terra network. TerraUSD aims to maintain its bond with the US dollar through algorithms. So if someone wants to mint on the UST, they should burn the dollar equivalent of the LUNA value. It works the other way around. This is a protocol that preserves the cost of UST.



In March 2022, Terra's creator, the Luna Foundation Guard (LFG), decided to add bitcoin to its reserve to add another cushion to its stablecoin, TechCrunch.com said. The idea is that if something goes wrong in prices, bitcoin support will help strengthen UST. Unfortunately, this did not happen and the stock market collapsed, bitcoin collapsed and the whole crypt market collapsed.



Terra (LUNA) is currently trading at $ 0.000000999967 per token, down 14.359% from a long-term high of $ 119.18 in April 2022, according to coingecko.com. TerraUSD (UST), which has lost its dollar fixation, is now trading at $ 0.13, coingecko.com said.



The bloodshed has spread to other stable coins, such as the Tether (USDT), the largest stable coin to lose its bond to the dollar. On May 12, the price of UST at one point reached a low of 0.6841 USD. This means that USDT holders have tokens worth less than $ 1. However, the token is currently back on track and according to coingecko.com is selling for $ 1.



The Bottom Line



The crypto crash taught many lessons this week. Even the top altcoins like Terra can suffer overnight losses and struggle to survive. The idea behind decentralized algorithm stablecoin, such as TerraUSD, looks fascinating, but it needs a better strategy. The centralized stablecoins like Tether (USDT), which are often criticized for insufficient cash reserves, look helpless in times of crisis.



This week will go down as a historical moment in the crypto industry and serve as a wake-up call for crypto enthusiasts who need to understand that a lot of work needs to be done. What is a cryptocurrency?



Cryptocurrency is a digital or virtual currency secured by cryptography, making it almost impossible to counterfeit or double costs. Many cryptocurrencies are decentralized networks based on blockchain technology - a distributed ledger implemented across a diverse network of computers. The explanatory feature of cryptocurrencies is that they are generally not issued by a central authority, which theoretically gives them immunity from government intervention or manipulation.



What is a scholarship? The stock exchange is broadly focused on gathering stock exchanges and other areas where companies' shares are bought, sold and issued publicly. These financial activities are carried out through formal institutional exchanges (physical or electronic) or through over-the-counter (OTC) markets operating according to a set of regulations.



What are stablecoins?



Stablecoins are cryptocurrencies whose value is tied to or linked to another currency, product or financial instrument. Stablecoins are said to provide a highly volatile alternative to the most popular cryptocurrencies, including bitcoin (BTC), making such investments less suitable for widespread use in transactions. Everything you need to know about cryptocurrency

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