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.
5. TerraUSD
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.
4. Luna
How exactly did the TerraUSD retain its $1 value? It did so by linking itself to sister cryptocurrency Luna. Every time the value of TerraUSD would move above or below $1, an algorithm would burn a certain amount of Luna, or TerraUSD, and adjust its supply to maintain the $1 price. Luna reached its all time peak of $116 on April 4, where its market cap stood at more than $41 billion. It suffered a painful crash in the days between May 4 and 12, falling from a price of $86 to $0.0041. It now stands at $0.00005682 as of June 23, and has been renamed Terra Classic.
3. Solana (SOL)
Solana (SOL) is the 9th biggest cryptocurrency in the world with a $12.46 billion market cap. It is the native cryptocurrency of the Solana Blockchain Ecosystem, which is a blockchain platform which offers developers high processing speeds and the ability to build decentralized apps and NFTs. The crypto sell-off has resulted in Solana losing 78% in the year to date, standing at $36.28 as of June 23. This is in comparison to its all-time high of $258 in November 2021.
Solana was founded in 2020, and is known for its impressively short processing times, which has made it popular among both individual users and enterprise customers. It also uses a proof-of-history (PoH) consensus developed by one of Solana’s founders Anatoly Yakovenko. This allows the blockchain platform greater scalability, making it easier to use and build various apps.
2. Ether (ETH)
Ether is the second largest cryptocurrency in the world with a $134 billion market cap. It is the native token of Ethereum, an open-source, decentralized blockchain platform which allows for smart contract optionality, reducing the time and fees it takes to process each transaction. The Ethereum platform is also capable of hosting other cryptocurrencies, and so far 280,000 digital coins have been launched through its ERC-20 compatibility standard, of which 40 make up the top 100 tokens in the world by market capitalization. Many decentralized finance (DeFi) applications have also been built on the platform, such as MakerDAO, Compound, and Uniswap.
Ethereum is expected to roll out an upgrade to its platform called Ethereum 2.0, which will switch the network from a proof-of-work (PoW) consensus mechanism (also deployed by Bitcoin) to a proof-of-stake (PoS) system, which is used by Litecoin and requires less energy for mining. This backend shift will improve processing times and allow users to build more scalable apps on the Ethereum blockchain network.
In June, Ether (ETH) fell below $1000 for the first time since it gained 386% in 2021, jumping to an all time high of $4,812 in November 2021. It now hovers around the $1,100 mark, and has fallen 70.54% since the start of the year as of June 23.
1. Bitcoin (BTC)
Bitcoin is the world’s largest and most famous cryptocurrency. It reached a $1.27 trillion market cap in November 2021 when one BTC was worth $69,000, an all time high. As of June 23, it has slid 57.23% in the year to date, and currently hovers around the $20,000 mark.
Bitcoin is a pure cryptocurrency, and its transactions take place on a peer-to-peer basis without the involvement of any third party. Miners have to solve complex mathematical problems using heavy-duty computers in order to be rewarded with Bitcoins, and many have likened BTC to gold because of its limited supply. There will only ever be 21 million Bitcoins in the world, and 19.07 million of these are already in circulation. Every four years, the Bitcoin network goes through a phenomenon called ‘halving’, where the the supply of new Bitcoin rewards given to miners is cut in half. The first ‘halving’ happened in 2012, then in 2016 and the third in 2020. Bitcoin payments are accepted by many popular companies, including Microsoft, PayPal, Amazon, Home Depot and Starbucks, among others.
You can also take a look at 10 Best Finance Stocks To Buy Now and 10 Underperforming Stocks Targeted By Short Sellers.
