All eyes remained on Terra in the crypto market last week, as lasting effects of the LUNA and TerraUSD collapse continued to reverberate. Markets actually managed to stabilize to some degree, and volatility was certainly not to the same extent of the week prior — which will be a welcome relief to traders. Short term opportunities presented themselves across many coins, however nobody appears to be on the road to recovery just yet - Terra included.
Markets last week were still recovering from the events of the previous week, although they managed to stop the rot and level out slightly. Many major tokens remain down on their previous 7 day positions, however coins such as Tron, Litecoin and BNB have managed to make modest improvements in amongst the market dip. What needs to be remembered at this point is that, as the markets started this week at a pretty low base, what may look like a good percentage based improvement may not necessarily translate into anything nominally significant. Tokens across the market remain below their recent values, and could still be considered as ‘cheap’, potentially making them a feasible investment opportunity. This is the kind of market sentiment that will drive the market upwards in the short term.
Communications between Terra and its community have been improved in recent days, and conscious efforts are being made by the now infamous crypto to genuinely resurrect its fortunes in a way that benefits both existing investors and new entrants. Terra founder Do Kwon has stated that he wants to split its existing blockchain network, also known as ‘forking’, and this time exclude TerraUSD from that network. Kwon will also look to create 1 billion new LUNA tokens that will be distributed to developers and previous purchasers of LUNA and UST, somewhat winning back a degree of favor amongst those keeping close tabs on the coin’s next move. That’s not to say that any confidence has been truly restored in Terra — in fact, far from it. However it is a stride in the right direction considering the deafening silence that was heard as events unfolded on May 12th, so credit where credit is due.
Bitcoin has entered the new week only approximately 0.5% down on its position at the beginning of the week. However, it spent the week jumping between $28–31k, with plenty of opportunity for short term investments arising in both market directions. On Friday, BTC fell from above $30k down to the higher end of $28k in a few short hours, giving traders ‘buying the dip’ an opportunity to make a decent return by Sunday night. Long term investors will still be awaiting further improvement in the world’s most popular cryptocurrency, as it remains at less than half of its peak $67k value from November 2021. Bitcoin may have enjoyed its brief period away from the limelight, however as events settle down with Terra, the market will turn to BTC to lead the way in its next steps.
Ethereum spent much of the week teetering between the positive and negative side of the $2k mark. Peaking at $2,145 at the beginning of the week, ETH hit $1,908 midweek before stabilizing somewhat on Saturday and Sunday. Coming into the new week, Ethereum had clawed its way above $2k, although it is still approximately 2% down on its week on week position. The short term stability felt in the market will be welcome to traders that have seen their ETH tumble over previous weeks, and they will no doubt be hoping for more of the same in this coming week. However, month on month they are down on their investment by approximately 33%, and will have their long term sights set on gaining on this position. The coming week will go some way to answering whether it’s a good time for new investors to enter the Ethereum market or not.
Overall, a good proportion of the crypto market has managed to stabilize itself over the past week, thanks to favorable actions taken by Terra and the calming of the market overall. Crypto has always proved itself to be resilient in the past, and more than capable of bouncing back from events like we saw with Terra. What has helped the crypto has been its forensic response — there have been no excuses made, and an in-depth analysis from all sides has highlighted what the fundamental issues were with the Terra issue. With that said, take a look at the month on month positions of many popular cryptocurrencies and it is clear to see that there is a long way to go before any ‘recovery’ can be mooted.
On a lighter note, Sunday was Bitcoin Pizza Day! A somewhat tongue-in-cheek day of celebration for the crypto community, it is the date that 12 years ago a hungry Laszlo Hanyecz bought some Papa Johns pizza for 10,000 Bitcoin. Yes, 10,000. Hopefully it was worth it, but it’s hard to justify even the best pepperoni pizza for what would be around $300,000,000 in today’s conversion — hopefully a lifetime of infamy will suffice! Nonetheless, Bitcoin Pizza Day was actually the first step that cryptocurrency took in becoming a legitimate payment form, and has much wider significance than simply poking fun at how expensive Hanyecz’s pizza proved to be. Although that is, in itself, pretty funny…
Stability is the key for this week in crypto, just as it was last week. It materialized on the whole, and actually presented some great short term trading opportunities at times across multiple markets. More of the same would be welcomed.
