Where to start? In a decade of crypto coverage, I’ve seen a lot of crazy things, but never a week like this. In the past, there have certainly been one-off incidents that shook up the industry – like the Mt. Gox hack in 2014, or Tesla buying $1.5 billion worth of Bitcoin, or Elon Musk shilling Dogecoin on SNL – but never a cascade of events as we have just seen.
In the next few days there will be many thoughts about what caused the madness. And maybe there will be some serious personal reflection on why the crypto community tolerates the people who sparked much of the current mess in the first place. But for now, let’s take a breather and take stock of what happened during the craziest week in crypto. Here are seven key moments.
1. Terra ignites: Until a week ago, Terra was the hottest thing in crypto: its governance token LUNA was a top 10 coin by market cap, and its algorithmic dollar-pegged stablecoin UST was the #4 stablecoin. And then pop! Both have almost dropped to zero. (LUNA is trading at a fraction of a fraction of a cent, while UST bottomed out at 13 cents.) Many projects have collapsed before Terra, but never one so big and never so dramatically. The crypto world will be talking about this disaster for years to come and explaining why so many in the industry were so quick to trust Terra’s high-risk structure.
2. $200 Billion in Crypto Value Vaporized in 24 Hours: This comes from a Bloomberg story on Thursday, which followed earlier reports that crypto markets had already lost over $1 trillion before Terra crack. To put that into perspective, $200 billion is more than the total market capitalization of Bitcoin in 2020. If you want to put a positive spin on the carnage, you might note that much of the collapse was driven by macroeconomic forces (it’s not just crypto that’s bleeding red this month- ci) and that the crypto market is now large enough to survive a loss of this magnitude. But stay. 200 billion dollars!
3. CORNER collapse: On Thursday, Coinbase (COIN) shares hit a low of $40.83, down 90% from its initial price of $381 in April last year. It is the flagship company in the crypto industry, and unlike many tech companies, it has been profitable for most of its existence. Coinbase’s spiral, which was continuing long before this week’s market meltdown, primarily reflects the fact that Wall Street still doesn’t know how to value the crypto. (Friday, the shares started to rally to near $70).
4. Secretary Yellen says there is no systemic risk: This news was buried amid market madness, but it’s a big deal that the Treasury Secretary told Congress this week that crypto poses no “systemic risk” to the broader US economy. The term “systemic” is technical and would have subjected the industry to a set of new punitive regulations.
5. Tether breaks the ball: Stablecoins are supposed to be stable. This week has challenged the whole concept. Tether (USDT), by far the largest stablecoin, briefly dipped to 95 cents before recovering. Tether has broken its ankle in the past but, amid Terra’s debacle, its latest slip-up was a terrible moment and will only increase scrutiny of Tether’s opaque accounting practices.
6. SBF takes a piece of Robinhood: FTX CEO Sam Bankman-Fried has revealed that he took an 8% position in HOOD, which could presage a full takeover. If that happened, it would be an ironic twist for Robinhood, which was once considered a darling of Silicon Valley and a serious rival to Coinbase. Today, its growth has slowed, it is cutting 9% of its workforce and the stock has fallen 70% in one year.
7. Musk says ‘maybe not’ to Twitter: It wouldn’t be a crazy week in crypto without some antics from Elon. Sure enough, the Tesla CEO kicked off Friday by suggesting he might not buy Twitter after all; the stock reacted badly. He later clarified that he was “still determined” to buy Twitter, but what happens next is anyone’s guess. Twitter is the industry’s biggest communications platform, and Musk its biggest influencer, so everything matters.
It was just seven newsworthy moments in a week full of many more, including an impending default by El Salvador thanks to the mismanagement of the country’s Bitcoin Bro chairman. Crypto has been on its craziest roller coaster ride yet, and my biggest takeaway is that most players in the industry will be fine. WAGMI, as they say. Unless you are a Terra bag holder.
It is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Editor-in-Chief Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to receive it in your inbox every Saturday. And read last weekend’s column: The Bitcoin bloodbath will get worse. Its good.
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