The market situation is now starting to show signs of capitulation, that is, the willingness of coin holders to get rid of their own positions at any disadvantage due to fear. For example, this is the result of coin behaviour over the last 24 hours.

And this is what the corresponding ranking for the last week looks like. Bitcoin fell in value by 21 percent – which is a very serious collapse.

The reason for the market collapse was, among other things, the problems of Terra, about which we have already written. The project said today that the only option to save UST is to absorb the cryptocurrency’s offering, which its owners want to sell. It would then supposedly be able to move towards a recovery of the exchange rate.

Crucially, Terra creator Do Kwon has announced a move to a collateral mechanism. This means that the algorithmic stablcoin has essentially proven ineffective, which will result in a change in its operating principle.

And since the coin is now priced at 33 cents instead of $1, there is hardly anything strange about this decision.

Why Bitcoin is falling

According to news outlet Decrypt, Bitcoin’s historical high in value has been recorded at $68,789. The coin is currently trading at $29,430, meaning BTC has managed to fall by more than 50 percent since the day the aforementioned record was set.

The phenomenon of most bitcoin holders being left in the red is quite rare. It first happened in late 2011 during the first major Bitcoin collapse, when hackers attacked the then largest cryptocurrency exchange, Mt. Gox. As a result, the price of BTC plummeted from $17.50 to a few cents.

Although Bitcoin periodically rose and fell in 2014 and 2015, there were only a few brief periods when holders of the cryptocurrency suffered unrealised losses. The next periods came in December 2018 and January 2019, and then again on March 16, 2020. So the current market environment is a rare occurrence.

Since the beginning of the month, there has also been a massive influx of BTC on exchanges, suggesting that investors are transferring their assets for immediate sale. However, some major market players are taking advantage of the opportunities created by the recent Bitcoin collapse. Over the past week, net inflows into crypto-based investment products totaled $40 million. Accordingly, some investors expect to buy back assets “at the bottom”.

Read also: Warren Buffett isn't willing to buy all the bitcoins in the world for even $25. But why?

Several parallels to past trading periods not just in the crypto market were drawn by billionaire Mark Cuban. He stated that crypto is now very much like the dot-com bubble of the early 2000s. Here’s his rejoinder.

The cryptosphere is going through the lull that the internet has already gone through.

According to Cuban, after the initial hype around a lot of interesting blockchains in the fields of DeFi, NFT and play-to-earn “we saw a phase of imitation where networks subsidised the movement of these applications into their networks”. He compared this phenomenon to the times when similarly overblown dotcom firms offering similar services collapsed.

Cuban doesn’t think it’s all bad and gloomy, as the billionaire still sees plenty of opportunity to grow the industry. Especially when it comes to commercial smart contract platforms that will eventually replace the concept of software as a service.

What we haven’t seen yet is the use of smart contracts to improve business productivity and profitability. This should be the next driving force for the crypto market. Those projects that simply copy what everyone else has will fail. We don’t need NFT or DeFi in every blockchain. We need smart contract applications to replace SAAS applications.


We believe that the current conditions in the cryptocurrency market do not look like a relatively short-term collapse, as they did in May 2021. From the looks of it, the niche may indeed have begun the so-called crypto-zima that Cardano founder Charles Hoskinson has been talking about. If that is the case, investors had better be careful not to try to "catch the knife" in an attempt to find the bottom of the asset's price. As 2018 has shown, the bottom may not be there for long.


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