Black Saturday: the two main cryptocurrencies in the world fall again

FILE PHOTO: A stock graph is seen with a representation of bitcoin in this picture illustration taken taken March 13, 2020. REUTERS/Dado Ruvic/File Photo

Bitcoin and Ethereum, the two largest cryptocurrencies in the world by market capitalization, fell sharply again this Saturday, in a new manifestation of the crisis of confidence in the crypto system that was installed from the increase in interest rates and the fall in world stock markets and that deepened after the collapse of the Terra/Luna algorithmic stablecoin, which in less than 48 hours it lost practically all its valuefalling from a capitalization close to USD 40,000 million to almost zero.

Since then, a month ago, Bitcoin, whose price had touched USD 70,000 in November 2021, fluctuated around USD 30,000, managed at times to approach USD 32,000 and this Saturday weakened again, trading below again. of $29,000, which is equivalent to a market capitalization of $538.6 billion, equivalent to almost 48% of the total capitalization of the cryptocurrency universe, today about two trillion dollars below its zenith, towards the end of last year . Since then, the crypto capitalization lost about four times the GDP of Argentina.

Around 3:00 p.m. in Argentina, Bitcoin was trading today at USD 28,495, losing just over 2% on the day and 4.3% in the last 7 days. Much stronger still was the fall of Ethereum, the second crypto in capitalization, whose value plummeted to USD 1,584 per unit, equivalent to a capitalization of just over USD 186,000 million, product of a drop of almost 9% on the day and 13.7% in the last week. Together, bitcoin and ethereum account for almost two-thirds of the world capitalization of the cryptocurrency system.

blow to confidence

As a result of the fall in prices and in particular the collapse of Terra/Luna, in recent weeks the demand for greater regulation of cryptocurrencies has intensified, in particular of the so-called stablecoin, supposedly of fixed value with respect to some other asset. , such as the dollar, through which most crypto transactions are made.

Do Kwon, founder of Terraform Labs, is being investigated by the police and prosecutor's office in Seoul, the South Korean capital
Do Kwon, founder of Terraform Labs, is being investigated by the police and prosecutor’s office in Seoul, the South Korean capital

On Thursday, the Korean police and prosecutors launched an investigation of Do Kwon, the young Korean founder of Terraform Labs, creator of the algorithmic stablecoin whose collapse plunged the entire system into uncertainty.

Metropolitan police in Seoul, the Korean capital, said they are investigating allegations that a Terraform employee defrauded the company out of an unspecified but millionaire worth of bitcoins.

Questioning and regulatory projects

In turn, in the US, a group of 26 scientists and academics headed by Bruce Schneider, harvard professor, Miguel de Icazaformer Microsoft engineer and Kelsey Hightower, principal engineer of Google Cloud, they asked in a public letter to Congress the regulation of cryptocurrencies and blockchain, the basic technology of the system. “They are not secure, they are not decentralized,” Schneier said of cryptocurrencies. “Any system where you forget your password and lose your savings is not a secure system,” he emphasized.

Meanwhile, the Republican Pat Toomey, head of the Senate Banking and Urban Affairs Committee, presented the bill Transparency of Reserves and Uniform Safe Transactions (TRUST, which in English means “Trust”), requiring the quarterly review of the support of the liabilities of the so-called Stablecoins, the great connectors of the crypto system, although without reaching the concept of “audit”.

Even a former “lunatic,” as supporters of the Terra/Luna stablecoin called themselves, prominent financier Mike Novogratz of Galaxy Holdings, predicted a “massive bankruptcy” and said that two-thirds of cryptocurrency hedge funds are likely to fail if the market turmoil continues.

“There are literally 1,900 cryptocurrency hedge funds. My estimate is that two-thirds will go bankrupt,” said Novogratz, whose enthusiasm for the algorithmic stablecoin created by South Korean Do Kwon had led him to tattoo his arm with a wolf (image of Wall Street traders) howling at the Moon. In 2021 Novogratz had discovered that bitcoin could be worth half a million dollars and replace gold as investors’ favorite hedge asset.

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