In this article, we discuss the 5 cryptocurrencies getting crushed by the current market crisis. If you want to read about some more beaten-down cryptocurrencies and the latest market situation, click here to read 10 Cryptocurrencies Getting Crushed By The Current Market Crisis.
Rising interest rates and sky-high inflation, along with fears that the economy is heading towards a recession, is what caused the market to sell-off risky assets including cryptocurrencies. But another significant reason for the recent crypto crash can be identified as the crash of TerraUSD in May 2022. Founded by South Korean entrepreneur Do Kwon’s Terra Platforms in 2018, TerraUSD was a stablecoin, which means it was a crypto coin pegged to the value of a dollar. Stablecoins are useful for traders when switching between different cryptocurrencies, because they can use a dollar-value intermediary between trades instead of having to switch to US dollars. Although most stablecoins are backed by actual assets, such as US dollars, Treasury notes or other debt, TerraUSD maintained its $1 value through algorithm-based financial engineering. Experts had warned this was an unstable foundation, but the coin was hyped and reached a market cap of $18 billion at its peak, becoming the world’s third largest stablecoin.
In May, TerraUSD fell below the US dollar, and attempts to bring it back up to $1 were to no avail. It first went down to $0.69, and ultimately went into what is known as a ‘death spiral’, losing all its value and now hovering in the 5 decimal places next to zero.