Bitcoin and cryptocurrencies were shaken by Terra LUNA Coin and UST earthquake! Fear of a new ‘Dot-com crisis’ is keeping investors from entering the market. FED statements were among the biggest factors in the rapid increase in crypto money news.
Luna and the sudden drops in many cryptocurrencies continue to cause investors to withdraw their funds. Especially many investors think that it is a repetition of the Dot-com crisis in the early 2000s.
Bitcoin (BTC) and cryptocurrencies, which have been melting for a while, experienced a ‘Great collapse’ with the crisis in the stable coin TerraUSD (UST) and LUNA Coin. As Terra LUNA Coin evaporated, dropping 99.99 percent, many investors lost all their money.
What is a dot-com bubble?
Years have passed, but even today, the famous Dot-com bubble is like a sword hanging over the internet and technology industry. When there is a sensational development in the rapidly growing industry by its nature, “is it a new bubble?” Whispers begin to be heard.
So, does smoke really come out of a place where there is no fire? Or should we blow out the yogurt every time our mouths burn from milk? It is not possible to give a clear and definite answer to this. Reviews of everyone who tried it can not go beyond the assumptions. Since the person who can make the most accurate predictions on this subject passed away about 500 years ago, it is up to us to predict the future with the most assured method we know, that is, by learning from the past.
Before the bubble: early 1990s
In fact, when the balloon began to inflate, there was not even the Internet yet. Everyone was talking about an “information society” and the conditions of that day were just laughable. However, the extremely promising developments, the value given to information and the increase in what can be done with the information obtained were reminiscent of the gold rush period a century ago.
As in the gold rush era, the basic motivation was basically the same: People flocked to a resource they thought they could get rich easily at an above-normal rate. Ironically, in both cases, the raiders’ target was California.
At that time, this “quadrillion dollar” digital world, which adorned the covers of all reputable business and economy magazines from Forbes to Newsweek, attracted great attention from both entrepreneurs and investors. On top of that, the introduction of the internet has increased the speed of this trend inexorably.
The dot-com bubble: mid-1990s – early 2000s
It is not easy to give an exact date for the balloon. Because March 10, 2000, the date when the balloon burst in the form of a nightmare, is actually a result, and this result occurred over time as the balloon slowly inflated. Some think the bubble will inflate in 1994, when Netscape released its first browser. For others, the start date of the bubble was the enactment of TRA97 (PDF in English) in 1997, which provided tax relief to investors in the US. While accepting that both are factors, it is necessary to accept that they are also. are important parts of the big picture, but not all problems are limited to them.
Although it is mostly mentioned with the collapse of the shares of internet companies in the stock market, one of the factors that inflated the bubble was the non-existent dreams of super-connected and super-interactive smart devices that we are gradually accustomed to. today.
At the time, everything digital seemed like a gateway to wealth for entrepreneurs and an unmissable opportunity for investors large and small. Greater interest from investors created the illusion that nearly every startup had millions of dollars in potential from day one, and company valuations skyrocketed unrealistically.
Worse, the picture was so striking that even seasoned investors seem to have forgotten to do their traditional investment assessments. In this period, when cash flow is almost not taken into account, prices of even very new companies increased by an average of 40 percent above what should be under normal conditions. Despite this, the interest of the investors continued. At that time, the combined value of nearly 400 listed internet companies reached $1.3 trillion, equivalent to 8 percent of the entire US stock market.
Eventually the bubble burst with a spectacular crash on the NASDAQ. Almost all of the small companies were destroyed, while the big ones were hit hard. Cisco’s shares, for example, fell 86 percent. Amazon shares fell from $107 to $7. This collapse caused companies to drag investors along with them.
While life was going on and everything was getting back on track, the September 11 attack dealt a heavy blow to the US economy, which had not yet healed the wounds of the dotcom bubble. The total loss of investors in these two events, namely between 2000 and 2002, is estimated to be around 5 trillion dollars.
Dot-com mid 2000s
It is estimated that after the bubble burst, more than half of internet companies in the US went out of business because they had exhausted their capital and were unable to attract new investment. Companies such as Amazon, Google and eBay, which managed to survive after the dust settled, have strengthened their position in the sector.
According to some assessments, the dot-com bubble is also the basis of another major US crisis in 2008. The reduction of interest rates to prevent the dot-com crisis caused many people who wanted to own a house with low interest, even though they did not have enough money, to turn to loans. The 2008 economic crisis exploded, as credit and insurance companies, which want to get rich quick, weren’t selective about their loan applications.
The dot-com bubble is the economic bubble that deflated in March 2000 when the stocks in the NASDAQ, which is the stock market index that includes technology companies, suffered a great loss of value.
The footsteps of the crisis that started in 1995 emerged at the beginning of 2000 and caused many investors to lose money. Although companies started to grow again after the crisis that ended in 2001, many investors made their investments with cautious moves.
Bitcoin and cryptocurrencies Terra LUNA Coin and UST earthquake
While Terra LUNA Coin evaporated with a 99.99 percent drop, the decline in the TerraUSD stablecoin, which should be indexed to $1, could not be stopped. Many crypto exchanges stopped their operations and left the related coins out of the list. The events have raised fears that a process like the ‘Dot-com bubble’ of the early 2000s could be repeated for cryptocurrencies.
With the effect of increasing liquidity in the world, Bitcoin and the crypto money market have become popular especially during the pandemic period. Enormous returns, price increases, signaled the formation of a bubble in the cryptocurrency markets. As a matter of fact, what happened in the months and especially in the last weeks caused unforgettable events in the financial markets. In Turkey, 280 billion dollars flew away in the cryptocurrency market, where one out of every 12 people traded.
The huge returns and price increases in the cryptocurrency market always come to mind, ‘Is there a bubble in this area?’ was bringing the question. Digital investors were as happy as the sunny summer days.
However, since the New Year, and especially in the last week and yesterday, the markets have experienced a ‘crypto winter’. There were meltdowns of up to 99 percent, in which all money was lost.
Fears that a process like the ‘dotcom crisis’ of the early 2000s could be repeated are also in the minds of investors.
Bitcoin’s 10 percent, Ethereum 20 percent and Luna’s 98 percent drop in 24 hours is also mind-blowing, ‘Will all the money disappear?’ brought the question.
The first five currencies that dominated the market also fell sharply. There was a loss of 280 billion dollars in market value. So Finland or Egypt disappeared in almost a day.
Coinbase warns of crisis
While the investor was experiencing this doubt, the panic increased when Coinbase, one of the largest crypto money exchanges in the world, warned its customers that they could lose all their money.
The most popular crypto exchange, Coinbase, warned that users could lose all their money if the company went bankrupt, after which the share price dropped 27 percent.
The fact that LUNA, which is in the top 10 in the crypto money market and has many investors, was removed from the transaction lists of important platforms after the depreciation exceeding 99 percent, brought the reliability of the said market back to the agenda.
Increasing the supply of the “stable coin” LUNA, which was issued by the same team to stabilize the price of the cryptocurrency UST, which was designed to be equal to one dollar, took the losses to very high levels. The value of LUNA has dropped to almost zero from its highest level of $120.
After this fluctuation in the price of LUNA, the Binance exchange first delisted LUNA in futures. Then the trading pairs “LUNA/BTC, LUNA/BIDR, LUNA/AUD, LUNA/BNB, LUNA/ETH, LUNA/USDT, LUNA/GBP, LUNA/BRL, LUNA/TRY and LUNA/EUR” were removed from the exchange as the price approached zero. .
“Cryptocurrencies will return to their glory days”
Stating that the value of UST has decreased to $ 0.22 and LUNA, which has tested the level of $ 120, has started to be delisted from the stock markets today, Bayoğlu said, “It seems that the foundation could not find the cash source needed to recover from anywhere.” used the phrase.
Arguing that crypto money markets can overcome these problems despite all that has happened, Crypto Investors concluded his words as follows: “Although it may encounter such problems under certain conditions, it should be noted that it is an area that is still in its infancy. The safe haven feature of cryptocurrencies is not currently met in practice. Digital gold Cryptocurrencies, which are priced in the logic of technology stocks with great potential instead of rhetoric, will return to their glory days in the coming years or months.
Hello there! My name is Oktay from Tokensboss editors. I introduce myself as a business graduate and writer. I have been doing research on cryptocurrencies and new business lines for over 2 years.