All eyes have been on the crypto universe over the last 48 hours, with the price of bitcoin down 22.4% in the last five days alone. As of the time of this writing, 4:45 AM on Thursday morning, we’re on the back end of a wild overnight session that makes it clear cryptos will be in focus Thursday day and likely into the end of the week.
In addition to bitcoin’s plunge this week, “stablecoin” TerraUSD (called UST) lost its 1:1 peg to the dollar, causing an air of anxiety around stablecoins and – by proxy – the entire plumbing of the crypto universe.
Richard Usher, head of OTC trading at BCB Group, alarmingly told Reuters that the moves are “reminiscent of the bank runs during the 2008 financial crisis”.
“The collapse of the Peg in TerraUSD has had some nasty and predictable spillovers. We have seen broad liquidation in BTC, ETH, and most ALT coins,” he said.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, added: “The Terra incident is causing an industry-based panic, as Terra is the world’s third-biggest stable coin” and it “couldn’t hold its promise to maintain a stable value in terms of U.S. dollars.”
All-day on CNBC Wednesday, guests were talking about whether or not something “systemic” was going on in crypto. On Wednesday, I also re-iterated that I had predicted a potential cataclysm back in November 2021 for crypto, stating that it could be the reason that China had chosen to sidestep crypto. I even speculated as to whether or not China would willingly contribute to such a meltdown.
The chaos (and poor earnings) on Wednesday resulted in shares of Coinbase (COIN) falling under immense pressure, trading lower by 26% on the day and an insane 56.95% over the last 5 days.
That, of course, didn’t stop “investor” Cathie Wood from jumping feet first into the fire and buying a half million shares in Coinbase on Tuesday. Judging by this morning’s 4:45am prints for COIN – at about $49 per share – she’s likely already down around 5% on her new shares.
But in the overnight session heading into Thursday morning, things got even shakier.