- According to data from CoinMarketCap, a whopping US$200 billion of market cap was wiped out in just 24 hours from digital assets.
- The cryptocurrency sector looks like it’s due for a bit of soul-searching and there are signs that the smart money has moved into a sector that at the very least has some provable use case – blockchain gaming.
In what many have claimed was cryptocurrency’s Lehman moment, a whopping US$200 billion of market cap was wiped out in just 24 hours from digital assets, according to data from CoinMarketCap.
The collapse of the TerraUSD algorithmic stablecoin and the LUNA token that was used to stabilize it roiled cryptocurrency markets.
LUNA now trades at close to zero, from an all-time-high of US$119 while TerraUSD is cents on the dollar at the time of writing.
Although TerraUSD was a rising stablecoin, helped in no small measure by Anchor Protocol which promised 19.75% annual yields on deposits of the stablecoin, it’s not as systemically entrenched in the rest of the cryptocurrency market.
Nevertheless, concerns over TerraUSD’s failure, in what is supposed to be a stablecoin, rocked an industry that is accustomed to its fair share of price shocks.
By Friday in Asia, most cryptocurrencies had recovered, but are still down from before the collapse of TerraUSD, led notably by gains in GameFi projects such as Axie Infinity.
As in the Lehman crisis, there was no white knight, no 11th hour rescue for TerraUSD or Luna and while steep declines were marked across the industry, there are green shoots of a rebound.
Sentiment had been poor already before the TerraUSD failure, but the collapse of the algorithmic stablecoin also provided at least some investors with a lower jump-in point and that may have spurred some who had been sitting on the fence when it’s come to cryptocurrencies to take the plunge.
Even as Luna was plummeting to zero, there were still last-minute gamblers betting on the ferocious volatility in an attempt to make a quick buck.
The cryptocurrency sector looks like it’s due for a bit of soul-searching and there are signs that the smart money has moved into a sector that at the very least has some provable use case – blockchain gaming.
If DeFi was built purely on speculation, then at least with GameFi, investors could justify the entertainment value that will facilitate greater adoption of cryptocurrencies.
