TLDR: It has been a nightmare week for cryptocurrency holders as the market crashed and bitcoin reached its lowest price since December 2020. Ethereum, BNB, XRP and many other digital coins have also fallen to their lowest levels in a long time. The crisis came after the Terra stablecoin, designed for 1:1 trading with the US dollar, collapsed.

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TerraUSD (UST), the 11th largest cryptocurrency by market cap, is an algorithmic stablecoin that uses a set of smart contracts to ensure its value stays as close to $1 as possible. But after hovering around $1 for a year, it crashed to 29 cents yesterday, sending its market capitalization from over $45 billion to under $5 billion. It has since risen to 62 cents, but that’s still far from $1.

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Terra’s support coin, Luna, has also plummeted, from $86 at the start of the week to its current price of 20 cents. Terra is designed so that traders can exchange 1 UST for a $1 Luna, regardless of the UST price.

Do Kwon, co-founder of Terraform Labs, the developer of Terra, tweeted: “I understand the last 72 hours have been extremely difficult for all of you – know that I am determined to work with each and every one of you to weather this crisis and we will build our way out of this.”

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The collapse of Terra affected many cryptocurrencies, the most notable of which is the largest of them all: bitcoin. At the time of writing, the price of BTC is $27,236, which is the lowest value since the crypto boom at the end of 2020. Bitcoin has lost nearly two-thirds of its value since its peak of $69,000 in November 2021.

Ethereum is worth $1,882, a level it hasn’t seen since last July. Dogecoin, Solana, Cardano, BNB, Polygon and others have also seen price drops this week as panic spreads through the markets.

While the collapse of Terra is the main reason nearly $1 trillion was wiped from the crypto market this week, other factors such as rising inflation and Russia’s invasion of Ukraine have exacerbated the problem.

market watch reports that the fall of Terra could lead to regulators paying more attention to stablecoins. At a Senate Banking Committee hearing Tuesday, Treasury Secretary Janet Yellen said Terra’s collapse “simply illustrates that it’s a fast-growing product and that there are risks to financial stability and we need a structure to match.”

The good news for non-cryptocurrency gamers is that free fall will surely make mining less profitable and should drive up the price of graphics cards. even closer to MSRP.