What is going on in the crypto market? Important developments

Today's (May 12) Crypto Market Crash News and Updates: The global cryptocurrency market appears to be in free fall, with the prices of several popular tokens hitting new lows. In the last 48 hours, the list of top cryptos by market cap has changed dramatically.

Terra (LUNA), which was one of the top cryptos just a few days ago, has dropped to 59th place on CoinMarketCap, losing over 99 percent of its value in the last seven days. Its price has dropped by over 96 percent in the last 24 hours alone.

In the last seven days, Bitcoin has lost over 28% of its value. BTC was only $28,542 at the time of publication. Meanwhile, the price of TerraUSD (UST), which is thought to be the driving force behind the current crypto market crash, has fallen by 32% in the last week. The price of UST has dropped by over 18% in the last 24 hours, to $0.6782.

Here are some of the most important developments and updates from the crypto markets:

1. In the last 24 hours, BTC has dropped 9%, ETH has dropped 15%, and altcoins such as LUNA have dropped over 90%. Despite a minor recovery that brought BTC back above $32,000, widespread overhead selling pressure and extreme fear in the market drove the price below $28,511.

2. "The rate of BTC exchange inflow has remained relatively high in recent days, according to data." "When investors intend to sell, they frequently transfer their holdings to exchanges," Darshan Bathija, CO founder & CEO of Vauld, told FE Online.

3. Luna fell below $1, and UST, the blockchain's stablecoin, lost its peg once more.

In addition, in the last few days, the total value locked on Anchor (Terra's largest DeFi protocol) has dropped by $11 billion.

4. After losing its peg to the dollar, Terra's algorithmic stablecoin UST crashed to a low of around $0.30.

5. Mudrex CEO and Co-Founder Edul Patel says: Bitcoin hit a new low of US$28,000 in the last 24 hours, the lowest since 2020.

“BTC appears to be at oversold levels with increasing selling pressure. Since yesterday, BTC has been struggling to find its support between US$27,000 and US$30,000. It is also likely that BTC may even break below the current level. Along with macroeconomic factors, the collapse of UST has largely impacted the crypto market. It may take some time for cryptocurrencies to recover from this crash.”

5. Most stable coins, such as Tether and USDC, are backed by assets such as cash and bonds, according to Bathija; algorithmic stablecoins, such as UST, are supposed to be automatically pegged to the price of another digital asset.

“One UST can be redeemed or minted for exactly $1 worth Luna. Luna Foundation Guard (LFG), the non-profit foundation created to support the Terra Ecosystem, bought various cryptocurrencies including Bitcoin in order to maintain the stable coin’s peg,” he said. 

6. When BTC fell to $30,000 earlier this week, LFG's reserves ratio to UST issued fell as well, forcing the company to liquidate its BTC reserves.

"The effect of this move is not only being felt in the market, but has also raised concerns from regulators. U.S. Treasury Secretary Janet Yellen cited the UST issue to push for stablecoin regulation," Bathija said.

By fLEXI tEAM