The crypto-asset market is not insensitive to a more than degraded macro-economic and geopolitical context . Galloping inflation, logistical concerns with the health situation in China and the war in Ukraine are all obstacles to economic growth.

The co-founder of the crypto-trading platform Coinrule, Oleg Giberstein, believes that the crypto sector is experiencing the same tension as the rest of the economy. This causes this fall of the last days. He declares :

 It’s not just the crypto sector that’s going down, everything’s going down, and the economic outlook for the next 6-12 months is bad. Central banks have difficult choices to make: reducing runaway inflation can also lead to slower economic growth. That’s why investors shy away from overly risky investments like cryptocurrencies and tech company stocks.

For him, the crypto-asset market looks complex for the next two years. Is this the start of a bear market? Only the next few months will confirm it or not.

Big panic and soaring fortunes: cryptos are collapsing

The Binance platform had announced it: if the price of LUNA/USDT contracts falls below 0.005 USDT, they will be delisted. This is finally what happened to these futures contracts on May 12, 2022 at 3:30pm UTC. This measure reflects the current uncertainty and concern over the dramatic collapse of Terra and its associated assets.

eToro also suspended LUNA trading, and Bybit delisted the LUNA/BTC pair. Subsequently, Binance finally removed the possibility of trading LUNA after it fell to $0.00004. We also read on Twitter that Crypto.com had delisted LUNA and suspended its withdrawals.

Why did the Terra Luna project collapse?

LUNA has seen a dramatic drop in recent days and is currently trading around $0.20 . A ridiculous sum compared to the heights reached a few weeks ago. So how did we get here?

For some like the founder of Cardano, Charles Hoskinson, Terra suffered an attack highlighting the intrinsic flaws in its functioning.

According to him, an institution borrowed 100,000 Bitcoin from the Gemini exchange. They would then have exchanged a large part of the BTC against UST, outside the market (over the counter) with Do Kwon for a reduced price. He gave his consent, which reduces the liquidity of the UST.

This institution would then have sold and dumped a large amount of BTC and UST on the market. This would therefore have caused a cascade of liquidation on the long positions in leverage in particular, slippage (difference between prices) and panic selling by investors. Many would have sold their LUNA and unstaked their UST in particular on Anchor to sell them.

This tweet therefore presents Terra as a Ponzi who would not have had enough BTC in reserve, despite his recent purchases, to prevent such a crash. None of these accusations have been verified and Gemini denies having granted such a loan. However, such manipulations exist in the crypto market. Some observers believe that Terra was the last victim.

Charles Hoskinson later tweeted that even if Gemini was right, Terra had indeed been the victim of an attack. For the time being difficult to know the truth… Speculation is going well and the next few weeks will surely bring us new elements.

The only certain thing for now is that the UST and the LUNA do not seem ready to recover from this descent into hell. These events seem to have already entered the history of the young crypto-currency market. They will certainly mark a turning point in its development.

The Terra blockchain at a standstill

Following these announcements, and for the second time in 24 hours, Terraform Labs announced the temporary shutdown of the Terra blockchain , stating that they were working on “finding a plan to get it back together”.

It is unclear, however, how quickly patches will be rolled out and when the blockchain will be restarted. At the time of writing, the price of LUNA is $0.000035 .

LUNA is directly linked to the stablecoin UST, which has fallen off the price of the dollar. For the cryptocurrency to recover, it will take a boost in confidence , which will come at the very least through a large-scale recapitalization. So far, Do Kwon’s stimulus package has failed to reassure the market.

What are the coins in which to invest in the midst of the fall of cryptos?

At a time when it seems difficult to bet on a rise in LUNA, let’s see which assets it seems reasonable to turn to.

ApeCoin (APE), still listed on all stock exchanges, is up 57% in the last 24 hours. This currency is recovering from the crypto market crash faster than most altcoins.

DeFi Coin (DEFC) is also emerging as an attractive alternative. Indeed, it was unaffected by the recent cryptocurrency crash as it was already undervalued. DEFC is up nearly 600% since May 5 , the rough start of the Bitcoin crash. Its value then went from $0.085 to $0.56. It is now stabilizing around $0.35.

DEFC has already retreated 98.75% from its previous all-time high of $4 reached in July 2021. Almost a year later, this may explain the lack of selling pressure. This event was due to delays on its roadmap, and the price of the token increased in response to these updates.

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