The Terra 2.0 project has started, so let's try it again

The cryptocurrency market, which has so far been highly correlated with the stock market this year, moved far away from it last week, plunging sharply. This could mean that investors are now more likely to take risks in the stock market than in the cryptocurrency market. Terra - the cryptocurrency that exploded earlier this month - introduces version 2.0, but kind of ignores the fact that it caused a crash worth billions.

About the author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

Strong correlation with stocks followed by its unexpected disappearance

This year, the cryptocurrency market has been uncharacteristically strong so far correlated with the stock market, in particular with stocks of technology companies, due to the period of risk aversion. However, last week these markets began to move in opposite directions. While the leading NASDAQ index rose by about 6,7% last week, prices Bitcoin i Ethereum at the close on Friday, they fell by around 5% and 14,7%, respectively. Bitcoin recovered most of its losses over the weekend, but is still a long way from a 6,7% increase, as was the case for the NASDAQ. 

At this point, ethereum has depreciated 8,3% since the beginning of last week. If this deviation from the correlation continues, it could create further anxiety in the cryptocurrency market as it could mean that investors are increasingly willing to take risks in the stock market than in the crypto market, which could prolong the strong downtrend of cryptocurrencies. Therefore, we encourage traders to keep an eye on the possible future correlation of the cryptocurrency market with stocks. To follow NASDAQ's footsteps, bitcoin needs to break resistance at 31 (BTC / USD) from the current level of 500. If it succeeded, it could rise to 30. However, if it overcomes the support at 600, the price of bitcoin could fall. up to 36.

This weekend, Ethereum recorded the lowest rate against bitcoin since October last year (0,06 ETH / BTC). So despite the upcoming anticipated one Ethereum "fusion" Bitcoin still appears to be the safest crypto-asset that investors are least likely to liquidate during periods of risk aversion and heightened uncertainty compared to ethereum and other cryptocurrencies. Accordingly, if bitcoin breaks the support at 28, it is likely to see a greater drop in ethereum and other cryptocurrencies in percentage terms.

Terra 2.0 is starting

One of the largest cryptocurrencies, terra, exploded earlier this month, falling into the spiral of death and eliminating a total market capitalization of $ 58 billion - respectively USD 40 billion in the case of the maximum LUNA and USD 18 billion in the case of the maximum of its stabilized currency UST. However, not even a month had elapsed until this weekend terra 2.0 has started. The idea of ​​terry 2.0 is to restore the ecosystem of various protocols, this time without the use of the native UST stabilized currency. Terra 2.0 has been distributed among terry owners. At the time of writing, the terry 2.0 market capitalization is $ 1,2 billion.

At some point, you have to admit failure and let the project die a natural death. Terra should be such a project. In our opinion, it has already done enough damage to both private investors and the entire cryptocurrency market. The people behind the terra seem to believe that they can always try again in case the first attempt doesn't work, regardless of the fact that their faulty design has already caused a billion crash. 

The case of terry does not put the cryptocurrency market in a good light, and neither does the 'let's just try again' narrative on terry 2.0. The cryptocurrency market should focus on projects that generate value that can turn them into more than just a speculative asset class.