Uneasy Calm Returns After Crypto's "Death Spiral" $270 Billion Meltdown
Cryptos $270 Billion Meltdown Gives Way to an Uneasy Calm
Even by the white-knuckle standards of the cryptocurrency universe, it was a standout week.
An algorithmic stablecoin called TerraUSD crashed from its dollar peg when the complex mechanism designed to ensure the link suddenly turned against it, sucking even the biggest digital assets into a vortex of panicked selling. Terms like “death spiral” entered the vernacular.
By mid-week, the turmoil briefly dragged down the $80 billion Tether stablecoin -- a giant of the market and a key cog in many transactions -- prompting its issuer to reassure investors that all is well. Exchange-traded products linked to crypto also got hammered, with one tracking the troubled Luna token dropping 99% in a single day.
On Friday, a semblance of calm had returned to crypto markets. But the tally was still steep, with some $270 billion of cryptoasset market value lost, according to CoinMarketCap, in the most volatile week for Bitcoin since October. Add to that the broader question: What other corners of the crypto universe might soon unravel and cause a market meltdown like this one?
“The ramifications for the space and what we've learned post-mortem are significant and vital lessons as we go forward,” Mati Greenspan, founder of crypto research firm Quantum Economics, wrote in a newsletter published late Thursday.
Despite jumping as much as 8.5% on Friday, Bitcoin is still down 13% over the past five days, while the second-biggest token Ether has lost 20%. Smaller so-called altcoins have taken even bigger hits. Luna, the token that was supposed to help TerraUSD maintain its peg, has lost almost all of its value.
Still, despite the rough week, many cryptos posted big jumps at the end of the
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