Domino Effect Sends Bitcoin Tumbling.
On Thursday, May 12, Bitcoin reached a low of $25,401 after TerraUSD (UST) un-pegged from the US Dollar, dragging almost all cryptocurrencies lower. More than $200 billion was erased from the crypto market and panic became the status quo of the blockchain.
The losses spilled over to the biggest stablecoin – USD Tether (USDT) – which dropped as low as $0.94 on some exchanges. At the time of writing, USDT returned to pre-crash levels but the same cannot be said about TerraUSD (UST), which is now trading at $0.18.
According to Terra’s Twitter account “The Terra blockchain has officially halted at block 7607789. Terra Validators have halted the network to come up with a plan to reconstitute it.” It’s unclear if it will ever be restarted but the tweet also reads “more updates to come”.
Last month, Luna Foundation Guard became the first blockchain entity to have two coins (LUNA and TerraUSD) in the CoinMarketCap Top 10 but at the moment, LUNA sits at the 220th spot in the same rankings and UST dropped to number 35. At the beginning of the current month, LUNA was trading at $80, and at press time, it is worth $0.00005574.
Despite some recovery, Bitcoin is still down 16.60% over the last 7 days and Ethereum is down 23.52% over the same period. However, the last 24 hours have been green, with the flagship currency adding 13.54%, and ETH adding more than 15%.
Chart Analysis – BTC/USD
After the massive crash experienced Thursday, Bitcoin recovered and is currently trading at $30,140, just above the key S/R level at $30K. This level will be very important going forward because if the pair can stabilize above it, we may see a recovery into the upper barriers.
According to the Relative Strength Index, Bitcoin is oversold since the beginning of the current week, a fact that oftentimes helps build bullish momentum. However, in a downtrend, the price of an asset can continue to move lower despite being oversold, so we may be dealing with a simple bounce that will be followed by another dip.
This further emphasizes the importance of the $30K barrier: if the downtrend will continue, $30K is a probable location for bearish movement to resume. If this week’s candle closes above the said level, we may see further upside next week, otherwise, BTC will likely revisit the low at $25,400.