Ethereum joins the Crypto dive: The second largest digital currency loses 20% of its value in 24 hours

The world’s second-largest cryptocurrency, Ethereum, has joined the cryptocurrency crash – its value has fallen 20% in the last 24 hours – as the digital currency slowdown hits investors who have bought in the Covid years.

Cryptocurrencies have fallen sharply in value over the past few days as fears of the global economy spread and investors begin to sell risky assets.

However, investors in more traditional stocks are also suffering, and US technology stocks have also fallen in recent weeks, including Amazon, which has fallen 30% in a month.

Many amateur investors began buying stocks and digital currencies during the Covid pandemic and made money because values ​​generally rose in a so-called bear market.

Ethereum has now lost more than half of its value this year, Bitcoin has lost a third of its value since January and Luna with 98% of its value wiped out overnight with suicide hotlines pinned to the Reddit site’s currency accordingly.

The popular digital currency exchange Coinbase has warned users that they could lose all their money if the company goes bankrupt – after the downturn sent the share price down by 27%.


A cryptocurrency is a digital currency that can be used for online transactions.

It’s the internet’s version of money – unique pieces of digital property that can be transferred from person to person.

All cryptocurrencies use “blockchain” and only one can be created and shared using specific agreed rules. For each cryptocurrency, the rules are a little different.

People can buy bitcoins through exchanges like Coinbase and Bitfinex.

Bitcoin was the first cryptocurrency, created in 2009.

Other currencies such as Litecoin and Dogecoin do the same, but have slightly different inflation levels and rules around transactions.

Currently, about 270,000 transactions take place every 24 hours.

These currencies do not exist as physical or digital objects. It is simply an agreement with other people on the network that your currency has been legally “mined”.

Blockchain is the registration of changes in the ownership of a currency that is broadcast through the network and managed by computers around the world.

The network works by exploiting the greed of individuals for the collective good.

A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global inventory of every bitcoin transaction.

As long as miners keep the blockchain safe, counterfeiting should not be an issue.

But because cryptocurrencies allow people to exchange money without the involvement of a third party, they have become popular with libertarians as well as technicians, speculators and criminals.

During the pandemic, historically low interest rates led economists to stimulate investors to buy more risky assets such as higher-yielding cryptocurrencies.

As rising inflation drives up interest rates to protect savings, these assets will be sold off in favor of safer government bonds – which will provide better returns.

The Bank of England raised interest rates by 0.25% to its highest level in 13 years at 1% on 5 May.

The Federal Reserve also raised interest rates to 1% on May 4, with further increases expected to avert the worst effect of inflation.

NASDAQ experienced its biggest one-day decline since June 2020 earlier in the week, and the cryptocurrency hit involves growing integration between the crypto market and the traditional market.

The index, which includes several top-tech companies, ended May 5 at $ 12,317.69, with shopping sites like Etsy and eBay leading the fall.

Both companies saw their values ​​fall by 16.8% and 11.7%, respectively, after announcing earnings estimates that fell below expectations.

Past high-flying technology stocks have begun to fall dramatically in recent months, fueling fears of a broader economic crash and making investors less likely to buy assets.

Elon Musk’s Tesla fell 36% last month amid news of the eccentric CEO’s attempt to buy Twitter.

The electric car manufacturer is now trading for £ 600, which is a dramatic drop from £ 937.69 a month ago.

Delivery giant Amazon has seen its price fall 30% since April 11, when the stock reached £ 1,725.19 today, down from £ 2,468.75 from £ 2,468.75.

The fall in these stocks fuels fears that the “ bubble” from the early 2000s is repeating itself.

In the late 1990s, increased access to computers and the Internet led to large-scale speculative trading of Internet companies.

The interest has resulted in a very high valuation of companies with the suffix “.com”.

After the US Federal Reserve raised interest rates after the boom of the late 1990s, speculative trading plunged and caused the dotcom bubble to burst, sending values ​​falling.

The volume of transactions conducted by crypto exchanges that have “blockchain” that records transactions has already fallen sharply.

“Cryptosales were driven by the depressing macro backdrop of rising inflation and interest rates, which sent shock waves through the technology sector and dragged crypto with it, confirming that Bitcoin and others serve no purpose as an inflation hedger,” said Victoria Scholar, chief investment officer. officer at Interactive Investors.

Luna lost its bond to the dollar this week and fell below $ 1 per share. coin, which caused prices to fall dramatically as the industry panicked (equivalent to a run on a bank).

“The Terra incident is causing panic in the industry as Terra is the third largest stackcoin in the world,” said Ipek Ozkardeskaya, chief analyst at Swissquote Bank.

But TerraUSD “could not deliver on its promise to maintain a stable value in US dollars”.

The crypto downturn has wiped out over $ 1.5 trillion in value from the markets, but investors are still hopeful that prices can recover as they have in the past.

However, unlike previous crashes, experts believe that this recent fall in prices may prove to be permanent due to greater fears of the global recession.

Bitcoin peaked at £ 16,194.81 on December 17, 2017, before falling below £ 9,000 five days later, losing almost 45% of its maximum.

The price returned to pre-crash levels in November 2021.

The slowdown has prompted Coinbase, an online trading platform, to issue a stern warning to customers: your crypto is in jeopardy if the stock market crashes.

According to the official Coinbase website, the company has over 98 million verified users. It is the largest cryptocurrency exchange in the United States.

Coinbase CEO Brian Armstrong tried to reassure shareholders in a series of tweets, one of which read: “Your funds are safe with Coinbase, as they always have been.”

Despite Armstrong’s claims, in an application to SEC, the company referred to customers as “unsecured creditors” in the event that Coinbase goes bankrupt.

This means that customers’ crypto assets will be considered Coinbase property by bankruptcy administrators.

The SEC filing, Staff Accounting Bulleting 121, requires that crypto platforms include clients’ crypto holdings as assets and liabilities on the balance sheet.

Armstrong wrote on Twitter that the company “was not at risk of bankruptcy” despite the application, which he said was made to bring the company into compliance with SEC rules.

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