crypto market in turbulence mood

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Bitcoin has dropped below $26,000 for the first time in 16 months, amid an increasingly widespread crypto sell-off that has erased more than $200 billion from the entire market in a single day. According to Coin Metrics, the bitcoin price dropped to $25,401.29 on Thursday morning. Bitcoin has since pared its losses and was last trading at $28,358.58, down 3.6%. On Thursday, UST was trading at around 33 cents, still far below the expected close of $1.

Luna, another Terra token that has a floating price and is used to absorb UST price shocks, has erased 99% of its value and is only worth 1 cent in the end. Investors are scared about the implications for bitcoin. The scary part is that the Luna Foundation Guard sells a large portion of its bitcoin holdings to bolster its ailing stablecoin. The fallout of Terra led to concerns about market contagion.

Tether, the world’s largest stablecoin, also fell below the $1 peg on Thursday, at one point falling to 95 cents. Economists have long feared that tether might not have the reserves needed to underpin its dollar rate in the event of a mass withdrawal.