The Terra Luna coin, valued at 118 last month, fell to 0.09 on Thursday. It also had an effect on another currency, the Terra USD, which is generally quite stable and is considered a stable coin.
Frightened by this situation, investors are now withdrawing their money from the big cryoto currencies as people now feel that ordinary currencies can sink stable coins with them. The companies behind the stable coin try to make sure that it is equal to the US dollar, for example a coin is equal to one dollar.
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The Terra USD hit 0.4 on Thursday, according to the website Coin Market Cap. The most popular stable coin 'Tedder' also hit a low of 0.95.
'Panic'
The term 'crypto crash' is trending on Twitter and Google. The total value of all cryptocurrencies currently on the market is 1.12 trillion, which is one third of its value in November last year.
According to the website Coin Market Cap, a bitcoin is now worth 27,000 its lowest value since 2020. Last year, a bitcoin cost about ً 70,000. Etherm, the second-largest coin in value, has lost 20% in the last 24 hours.
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Economist Francis Coppola says the collapse of the Terra USD has created "panic" as large financial institutions have sold large portions of their assets and everyone else is trying to get their money out as soon as possible. We are trying.
"There's really panic here."
The founder of Terra Farm Labs, the company behind Terra USD and Terra Luna, tweeted: "I understand that the last 72 hours have been very difficult for you all. I will work with all of you to get out of this crisis and we will find a way out of it.
Terra Farm Labs' Discard Server (a platform where investors get together and discuss various issues) posted a notice saying, Uncertainty and misinformation could not be spread. Paolo Ardonio, Tedder's chief technology officer, assured those holding the currency on Twitter that the company had cash reserves to pay everyone.
Strong legislation
Legislators and authorities around the world are pushing for legislation on 'stable coins'.
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US Secretary of the Treasury Janet Yellen, referring to the collapse of the Terra USD in the Senate Standing Committee on Tuesday, stressed the need for strong legislation.
"This makes it clear that this is a rapidly growing thing and that there are concerns about financial stability," he said. That is why we need such an appropriate framework.
A report from the US Treasury Department last month outlined plans for legislation on stable coins. The report also predicted that it could become a "broad source of payment".
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