Bitcoin went below $26,000 for the first time in 16 months, amid a bigger cryptocurrency sell-off that saw the whole market lose more than $200 billion in a single day.
The price of bitcoin plunged as low as $25,401.29 on Thursday, according to Coin Metrics. It’s the first time the cryptocurrency has sunk below the $26,000 level since Dec. 26, 2020. Ether, the second-biggest digital currency, tanked to a price of $1,704.05 per coin.
Stablecoins are like bank accounts of the barely regulated crypto world. TerraUSD, or UST, is supposed to mirror the value of the dollar. But it plummeted to less than 30 cents Wednesday, shaking investors’ confidence. Another stablecoin token, Luna, erased 99% of its value and was last worth just 4 cents.
Terra, the world’s biggest stablecoin, collapsed Thursday, dropping below its $1 peg to the dollar for the first time. Luna Foundation Guard, a fund set up by Terra creator Do Kwon, had amassed a multibillion-dollar pile of bitcoin to help support UST in times of crisis. The fear is now that it will sell some of its bitcoin holdings to shore up its ailing stablecoin. That’s a risky gamble, given bitcoin is itself an incredibly volatile asset.