Bitcoin, Terra, Luna, Australia: Crypto Massacre for Australian Investors – Finance

Bitcoin has fallen dramatically in value over the past seven months (pictured) from $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week

Bitcoin has fallen dramatically in value over the past seven months (pictured) from $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week

The more than a million Australians who have invested in cryptocurrencies have watched with horror at the financial carnage their value plunge has caused this week.

Bitcoin, the most well-known cryptocurrency, has fallen in value over the past seven months, from its peak of $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week — the first time Bitcoin has fallen below $30,000 since July 2021.

Bitcoin has since recovered slightly to just over $31,000, but that’s still down nearly 50 percent in a matter of months.

But while crypto prices have taken a nosedive in recent days, marking huge losses for many investors, leading expert Caroline Bowler said better times are ahead — and explained what’s going on.

Bitcoin has fallen dramatically in value over the past seven months (pictured) from $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week

Bitcoin has fallen dramatically in value over the past seven months (pictured) from $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week

Bitcoin has fallen dramatically in value over the past seven months (pictured) from $61,374 ($88,650) in October to $29,870 ($43,150) earlier this week

Ms Bowler, the chief executive of BTC Markets, said something akin to “a run in the bank” with cryptocurrencies has happened in the past two days.

It started when the two main tokens of the controversial cryptocurrency project Terra went into free fall on Wednesday.

TerraUSD, also referred to as UST, is a so-called ‘stablecoin’ intended to maintain a one-to-one peg with the US dollar.

But UST fell to 26 cents, before climbing later to 68 cents.

Its sister token Luna, which has a floating price, fell below 90 cents before recovering slightly to $1.18.

Luna has lost about 96 percent of its value in the past week and now has a smaller market value than its stablecoin counterpart.

“(UST’s) one-to-one pairing has been destabilized in what some in the industry are calling a George Soros style attack, but that’s just speculation,” Ms Bowler told the Daily Mail Australia.

(Mr. Soros, a Hungarian-born American businessman, made about $1.5 billion in a month in late 1992 betting against the British pound. There is no suggestion that he is trying to do anything similar with USTs.)

“Because that happened, in addition to the volatility we’ve seen in the Nasdaq and global markets, that contagion has combined to create what we’re experiencing right now.”

Ms Bowler said the crypto decline is both reflective of what is happening in global markets in general and “also linked to the rise in interest rates that we have seen in the US and all other major economies.”

BTC Markets CEO Caroline Bowler (pictured) said something akin to 'a run in the bank' has happened with cryptocurrencies

BTC Markets CEO Caroline Bowler (pictured) said something akin to 'a run in the bank' has happened with cryptocurrencies

BTC Markets CEO Caroline Bowler (pictured) said something akin to ‘a run in the bank’ has happened with cryptocurrencies

She said the latest rally in Bitcoin was directly related to Covid lockdowns. “That pumping of excess money (via incentive payments) was looking for a place to go and pushed the price up.”

Ms Bowler said the huge price movements seen in crypto value are a celebration because it is relatively new.

She said one of the advantages of traditional financial markets “is that they have had enough time to build liquidity with large institutions and several other players in the market.”

“Because crypto has only grown in the last 10 years or so, it doesn’t have the same underlying liquidity core, so if a part moves, it moves at a bigger clip.”

The value of cryptocurrency Bitcoin has fallen by almost 50 percent in seven months.  Pictured is a person with a bitcoin token

The value of cryptocurrency Bitcoin has fallen by almost 50 percent in seven months.  Pictured is a person with a bitcoin token

The value of cryptocurrency Bitcoin has fallen by almost 50 percent in seven months. Pictured is a person with a bitcoin token

Ms Bowler completely dismisses a headline in British magazine Spectator this week announcing that ‘crypto is dead’.

“In fact, people have been saying crypto is at its peak for a decade, but it’s still there,” she said.

Ms Bowler said that “the number of cryptocurrency holders is comparable to (the number of people using) the internet in 1997” and that it will continue to grow in a similar fashion.

The Australian crypto market is worth about $2 billion, with an average investment of about $20,000.

WHAT ARE CRYPTOCURRENCES?

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

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

All crytocurrencies use ‘blockchain’ and one can only be created and shared using specific agreed rules. The rules are slightly different for each cryptocurrency.

Bitcoins are lines of computer code that are digitally signed every time they travel from one owner to another.  Physical Coins Used As Illustration

Bitcoins are lines of computer code that are digitally signed every time they travel from one owner to another.  Physical Coins Used As Illustration

Bitcoins are lines of computer code that are digitally signed every time they travel from one owner to another. Physical Coins Used As Illustration

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. They are just a collective agreement with other people on the network that your currency has been legitimately ‘mined’.

Blockchain is the record of changes in ownership in a currency that is broadcast over the network and maintained by computers around the world.

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

A network of tech-savvy users called miners keeps the system fair by pouring their computing power into a blockchain, a global running count of every bitcoin transaction.

As long as miners keep the blockchain safe, counterfeiting shouldn’t be a problem.

However, because cryptocurrencies allow people to trade money without a third party getting involved, they have become popular with libertarians as well as technophiles, speculators – and criminals.

Source: New feed