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Crypto crash: Nearly $1 trillion is wiped off the markets as Bitcoin reaches its lowest level since 2020

An algorithmic stablecoin, TerraUSD (UST) is the eleventh largest cryptocurrency by market capitalization. It uses a set of smart contracts to keep its value as close to $1 as is practically possible. The price of the stock, which had been hovering around $1 for the better part of a year, dropped to 29 cents yesterday, bringing the company's market capitalization down from more than $45 billion to less than $5 billion. Since then, it has made a comeback to 62 cents, but this is still a significant amount less than $1.

The value of Luna, the Terra network's support coin, has also experienced a precipitous decline, falling from $86 at the beginning of the week to its current price of 20 cents. No matter the current market price of UST, traders will always be able to exchange 1 UST for $1 worth of Luna thanks to Terra's design.

The co-founder of Terra developer Terraform Labs, Do Kwon, tweeted the following: "I realize that the past 72 hours have been extremely difficult for everyone - please know that I am committed to working with each of you to weather this crisis, and we will build our way out of this."

The collapse of Terra had an impact on a great number of cryptocurrencies, the most notable of which was Bitcoin because of its position as the most valuable cryptocurrency. At the time of this writing, the price of Bitcoin (BTC) was trading at $27,236, which is its lowest value since before the crypto boom at the end of 2020. Since reaching an all-time high of $69,000 in November 2021, the price of bitcoin has dropped by almost two-thirds.

The price of Ethereum has not been this high since the middle of July of the previous year. As market anxiety grows, the prices of numerous cryptocurrencies, including Dogecoin, Solano, Cardano, BNB, and Polygon, have fallen precipitously this week.

The situation has been made much worse by the presence of additional elements such as rising inflation and Russia's invasion of Ukraine. The failure of Terra was the primary factor behind this week's loss of nearly one trillion dollars on the cryptocurrency market.

MarketWatch suggests that the fall of Terra could lead to increased regulatory scrutiny of stablecoins as a result. Janet Yellen, the Secretary of the Treasury, testified on Tuesday in front of the Senate Banking Committee that the failure of Terra "simply illustrates that this is a rapidly growing product with risks to financial stability and that we need an appropriate framework."

The price freefall will almost certainly make mining less profitable, which is good news for gamers who do not own cryptocurrencies, and it should push graphics card prices closer to the manufacturer's suggested retail price (MSRP).

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