Bitcoin news – latest: Crypto prices collapse as investors say they have lost fortunes

The crash is continuing. Ethereum is the worst hit  – but far from the only digital coin to see dramatic drops this morning.

Suicide hotline numbers have been pinned to the top of the popular sub-Reddit for the Terra (LUNA) cryptocurrency, after 98 per cent of its value was wiped virtually overnight.

Members of the forum are reporting losing their life savings, while some retain a sliver of hope that the project can be rescued.

“I should’ve cashed out when it was $100, then I would have been up $25,000,” wrote Reddit user No-Forever.

Another member wrote: “I lost over $450,000, I cannot pay the bank.”

Until recently LUNA was among the top 10 most valuable cryptocurrencies in the world, with advocates claiming that its potential to transform Web3 could see its value climb even higher.

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After hovering above the $30k mark for most of the past couple of days, bitcoin took another very brief dip below the price point before almost immediately returning back above.

This happened a few times last July, as bitcoin managed to resist the downward momentum and find a strong support level between $28k – $32k. It’s still very precarious for the cryptocurrency, as it continues to teeter above the unknown.

Since rising above $30,000 at the start of 2021, bitcoin has never fallen below it for any significant period of time – though it has bounced off it a few times. The coming hours and days could prove critical as to whether this trend can continue.

Terra’s UST stablecoin, which is meant to be pegged to the price of the US dollar, is now worth less than a third of that, sending shockwaves through the decentralised finance (DeFi) industry and the broader crypto space.

The Luna Foundation Guard (LFG) is now seeking to raise $1 billion in order to rescue UST and get it back on parity with the dollar.

According to Terraform Labs founder Do Kwon, LFG is “close to announcing a recovery plan for UST”, though its a complex task for a token controlled by AI algorithms.

The price of Terra (LUNA) has also collapsed, falling by more than 97 per cent over the last 24 hours, according to CoinMarketCap’s price index.

The number of large holders of bitcoin, known as whales, has reached its lowest level since November 2020.

The trend was spotted by crypto commentator Lark Davis, who shared a graph showing the number of bitcoin whales tracked through data from on-chain analytics firm Glassnode.

The drop in the number of whales shows how severe this latest sell-off has been, but is also a good sign that the cryptocurrency is being more evenly distributed among investors and not being hoarded by a small group.

What caused bitcoin’s price crash and where does it go from here? These are the questions we asked crypto market analysts and experts in order to help decipher what exactly is going on.

The downturn has coincided with a major slump for tech stocks, with some saying cryptocurrencies have become more synced up with traditional markets as they become more accessible to both retail and institutional investors. Others warn that holding the $30k level could be critical for bitcoin’s short- to medium-term prospects.

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MicroStrategy, the world’s biggest corporate investor in bitcoin with holdings of roughly $4 billion at current rates, has so far refused to sell any of its crypto stockpile.

Some of that stash was acquired through bank loans that used the firm’s existing holdings as collatoral, which could lead to complications if the price falls considerably further.

CEO Michael Saylor has shared what the plan is if bitcoin completely implodes, claiming that even if the cryptocurrency’s price falls below $3,562 – 90 per cent down on today’s prices – the company could still survive.

There has already been $1.1 billion liquidations of leading cryptocurrencies over the last 24 hours, according to data from Blockworks, but the mass sell-off appears to have subsided.

Bitcoin has so far managed to hold above the $30k level, but only just. After climbing above $32,000, it has since slid back down to $31,000 in the last hour.

When compared to the volatility of recent days, today has so far been relatively calm. But is there more storm still to come?

A popular adage from veteran bitcoin investors during price crashes is “when in doubt, zoom in out.”

Looking at the bigger picture shows that bitcoin is up 250 per cent from May 2020, up 35 per cent since May 2018 and up more than 6,000 per cent since May 2016.

Zooming out even further, a decade ago one bitcoin was worth just $5. That marks an astonishing 600,000 per cent price gain.

The scale model of El Salvador’s as-yet unbuilt Bitcoin City, which was shared by President Nayib Bukele overnight, has given some insight into the mega project.

There’s a lot of trees, a lot of landmarks, and even a “beautiful lookout in the volcano”. That volcano is going to be used to not only power the city with geothermal energy, but also provide the energy to mine bitcoin.

The circular city will slope up the side of the Conchagua volcano on the Gulf of Fonseca in the south-east of the Central American country, with construction expected to begin later this year.

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