Where to start? In a decade of dealing with crypto, I’ve seen a lot of crazy stuff, but never a week like this. In the past, there have certainly been one-off incidents that have rocked the industry, such as 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 like we just saw.
Over the next few days, there will be plenty of thinking about the cause of the madness. And perhaps there will be some serious self-reflection as to why the crypto community tolerates the people who caused much of the current mess in the first place. But for now let’s take a breather and take stock of what the hell happened in crypto’s craziest week ever. Here are seven key moments.
1. Terra goes up in flames: Until a week ago, Terra was the most popular in crypto: its governance token LUNA was a top-10 coin by market capitalization, and its dollar-pegged algorithmic stablecoin UST was the No. 4 stablecoin. And then, doll! Both went almost to zero. (LUNA trades at a fraction of a fraction of a cent, while UST bottomed out at 13 cents.) Numerous projects have collapsed for Terra, but never this big and never in such a spectacular way. The crypto world will be talking about this disaster for years to come – and autopsy why so many in the industry put their trust in Terra’s high-risk structure so quickly.
2. $200 Billion of Crypto Value Evaporated in 24 Hours: That’s from a Bloomberg story on Thursday, which followed previous reports that crypto markets had already lost more than $1 trillion before the Terra crack up. To put this in perspective, $200 billion is more than the full market cap of Bitcoin in 2020. If you want to put a positive spin on the carnage, you can note that much of the collapse was caused by macroeconomic forces (it’s not just crypto that’s bleeding red this month) and that the crypto market is now large enough to survive a loss of that magnitude. But still. 200 billion dollars!
3. COIN collapse: On Thursday, Coinbase (COIN) shares hit their lows at $40.83 – down 90% from its debut price of $381 in April last year. This is the flagship company of the crypto industry and unlike many other tech companies, it has been profitable for most of its existence. Coinbase’s spiral, which was underway well before this week’s market collapse, mainly reflects that Wall Street still doesn’t know how to value crypto. (On Friday, stocks began to climb back to nearly $70).
4. Secretary of State Yellen says no systemic risk: This news was buried under the market craze, 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 a technical term and would have subjected the industry to a series of punishing new regulations.
5. Tether breaks the goat: Stablecoins are believed to be stable. This week, the whole concept was questioned. Tether (USDT), by far the largest stablecoin, briefly fell to 95 cents before recovering. Tether has broken his pen in the past, but in the midst of the Terra debacle, the latest misstep was terrible timing – and will only increase the investigation into Tether’s opaque accounting practices.
6. SBF takes a piece of Robinhood: FTX CEO Sam Bankman-Fried revealed that he has taken an 8% position in HOOD, which could herald a full takeover. If that happens, it would be an ironic twist for Robinhood, which was once seen as a darling of Silicon Valley and a serious rival to Coinbase. Now that growth has slowed, it is cutting 9% of its workforce and its stock is down 70% in a year.
7. Musk says “maybe not” to Twitter: It wouldn’t be a crazy week in crypto without some Elon antics. Sure enough, Tesla’s CEO started Friday by suggesting that he might not buy Twitter after all; the stock reacted badly. He later clarified that he is “still committed” to buying Twitter, but what happens next is anyone’s guess. Twitter is the most important communication platform in the industry and Musk the biggest influencer, so it all matters.
That was just seven news moments in a week filled with many more, including an imminent default by El Salvador due to mismanagement by the country’s Bitcoin bro president. Crypto went on its craziest roller coaster ride yet, and my biggest takeaway is that most in the industry will do well. WAGMI, as they say. Unless you’re a Terra bag keeper.
This is Roberts on Crypto, a weekend column by Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to get it in your inbox every Saturday. And read last weekend’s column: The Bitcoin carnage will get worse. This is good.
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