The previous week was historic for the cryptocurrency market, after one of the most catastrophic events in the history of crypto assets took place, with Terra (LUNA) being the protagonist, or rather antagonist? This event, along with other factors that have occurred over the last few days, contributed to another crash in other assets.

Bitcoin has returned to trading below $27,000 and Ethereum close to $1,800, prices that we hadn’t seen since January 2021, but without a doubt it is not as surprising as what has happened with Terra, since the project that had positioned itself in recent months in the top 10 market cap asset list, and even traded up to $120 just a couple of days ago. Today, after a catastrophic week for the Terra ecosystem, its token, LUNA, has lost absolutely all its value, reaching $0, in one of the most shocking events in the history of this market, in which a large number of people lost huge amounts of money, and some have even seen their life savings go up in smoke.

Everything has happened quite quickly, in less than a week we saw a well structured project fall, which has dragged the entire market with it into a dramatic crash, but without a doubt, the most worrying thing is that a large amount of investors has lost confidence in crypto, since practically Terra has shown us that any currency can fail unexpectedly. But what precisely happened to Terra? Terra’s ecosystem owns an algorithmic stablecoin, called Terra USD (UST), which has a complex token burning system, as well as an emergency reserve in Bitcoin to correctly follow the value of the US dollar. Thanks to different factors, including the dramatic fall in the market thanks to the rise in interest rates by the Federal Reserve, which totally destabilized its Bitcoin reserves which was used in assistance to stabilize the price of UST, the stablecoin collapsed, crashing down to trade below $0.15. In addition, another reason that was an important part of this collapse was the drop in the returns offered by Anchor Protocol, the savings account that offered interest of up to 20% for depositing in Terra, to users for having their savings in the stablecoin. This undoubtedly generated great panic among investors, who decided to withdraw their funds from the ecosystem, which, with fair reasons, totally lost their confidence.

Terra began to plummet, causing more and more investors to withdraw their funds, which led to the asset rapidly losing up to 99.99% of its value, which is now trading for less than a thousandth of a cent. Subsequently, Do Kwon, the founder of Terra and the mind behind the UST stablecoin, appeared on social networks and in various research forums apologizing to all users for what happened, also encouraging them to trust that the project will go ahead, ensuring that they will seek to develop a model that manages to solve everything that happened, so that the Terra network can be restored. There is no doubt that this is going to be quite complicated, since a large number of people have been left with practically nothing. In the blink of an eye, we have witnessed an event that has taught us a great lesson, and that is that no matter how stable and healthy a project looks, anything can happen, which is why it is extremely important to diversify. Do you think it will be the end of LUNA, or will it be reborn? LUNA/USDT 1D (TradingView Chart) In other news, the possibility of an economic recession has alerted investors, and CoinBase, one of the largest exchanges in the United States, has lost nearly 2 million users in the last 3 months, which was seen reflected in its earnings report, which also caused its shares to fall around 23%. However, CoinBase CEO Brian Armstrong stated that there is absolutely no risk of the company going bankrupt. As if that were not enough, the Central Bank of Argentina has announced that the banks of the South American country will not be able to offer their clients the option of investing in cryptocurrencies, since they consider them quite risky for both users and the Argentine financial system. Bitcoin is above $29,700 near a support zone, which could create a very interesting floor to take BTC to $34,000. However, should it be breached to the downside, it could end in a new low in the world’s largest cryptocurrency. BTC/USDT 1D (TradingView Chart). For its part, Ethereum behaves similarly to Bitcoin, and is trading above $2,000, near a support zone. We can see another support near $1,770, and resistance above $2,340. ETH/USDT 1D (TradingView Chart). There is no doubt that what happened with Terra has been a totally catastrophic event in the world of cryptocurrencies, and that we have experienced quite complicated days. However, by investing intelligently, diversified and with good risk management, the long-term horizon still presents a very interesting opportunity. Without further ado, we wish you an amazing week.