A US$2 trillion free-fall rattles crypto to the core

The collapse of the Terra ecosystem – a much-hyped experiment in decentralised finance – began with its algorithmic stablecoin losing its peg to the US dollar, and ended with a bank run that made US$40bil (RM176.20bil) of tokens virtually worthless. — Reuters

For a generation of alienated techies, crypto’s all-for-one ethos was its biggest draw. Now panic is spreading across this universe – and that same ethos is posing what may be the biggest threat yet to its survival.

What started this year in crypto markets as a “risk-off” bout of selling fuelled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008. As Bitcoin slipped almost 70% from its record high, a panoply of altcoins also plummeted.