Market Wrap: Cryptos Extend Losses as LUNA Plunges

Bitcoin declined by as much as 6% over the past 24 hours, as LUNA dropped 96% and SOL fell 30%.

AccessTimeIconMay 11, 2022 at 8:34 p.m. UTC
Updated Nov 14, 2022 at 6:01 p.m. UTC

It was a sea of red in crypto markets on Wednesday as stablecoin woes kept some traders on edge.

Terra's LUNA token plunged for the third consecutive day, declining by as much as 96% over the past 24 hours. LUNA was meant to be a buffer against volatility for the stablecoin TerraUSD (UST), but it has succumbed to extreme selling pressure. The Luna Foundation Guard moved the entirety of its reserves to bitcoin exchanges to defend its UST stablecoin’s 1:1 dollar peg on Wednesday.

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Further, the European Commission is considering a ban on large-scale stablecoins, which have become widely used in place of fiat currency, according to a document seen by CoinDesk.

Bitcoin (BTC) declined by as much as 6% over the past 24 hours, compared with a 9% decline in ether (ETH) and a 30% decline in Solana's SOL token. Bitcoin is outperforming most alternative cryptos (altcoins), which typically occurs in a down market because of its lower risk profile relative to smaller tokens.

Latest prices

Bitcoin (BTC): $29,155, −6.40%

Ether (ETH): $2,104, −10.31%

S&P 500 daily close: $3,935, −1.65%

Gold: $1,853 per troy ounce, +0.71%

Ten-year Treasury yield daily close: 2.92%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at

Bitcoin's trading volume has ticked higher over the past few days, albeit by less than in previous spikes. That could be an initial sign of capitulation as BTC stabilizes at about $30,000.

"The volume surge is especially interesting considering the dwindling spot volumes we have seen during the latest month, as April saw the lowest bitcoin spot volumes since last summer," Arcane Research wrote in a report earlier this week. "The recent uptick in volatility seems to have woken up traders."

Bitcoin's trading volume (CoinDesk, CoinGecko)
Bitcoin's trading volume (CoinDesk, CoinGecko)

Volatility returns

BTC's front-month implied volatility also spiked to its highest level since March. Traders are expecting greater price swings over the short term, although volatility spikes tend to be short-lived.

QCP Capital, a Singapore-based crypto trading firm, noted large amounts of put demand from its option trading desk this week, which pushed BTC and ETH risk reversals (calls minus puts) even more negative from -8% to -15%. QCP expects more volatility over the short term.

Bitcoin's implied volatility (Skew)
Bitcoin's implied volatility (Skew)

The chart below shows a rise in BTC's put/call ratio, which suggests bearish sentiment among option traders. The ratio is at its highest level since February, which preceded an upswing in price.

Further, open interest in bitcoin's perpetual swaps market surged to a new high on Tuesday. That suggests an increase in leverage among derivative traders, which typically leads to sharp price swings – a relief rally or breakdown.

Still, the cost to fund long positions (funding rate) remains neutral, which means some traders are still willing to increase exposure to BTC despite the current stress. Typically, funding rates collapse during sell-offs.

Bitcoin's put/call ratio (Skew)
Bitcoin's put/call ratio (Skew)

Altcoin roundup

  • Terra to the ground: The Terra blockchain’s native token, LUNA, plunged to as low as $1, shedding 96% of its value in just a day. LUNA is supposed to absorb price shocks of the blockchain algorithmic stablecoin, TerraUSD (UST), but UST’s failure to regain its $1 peg made LUNA virtually worthless. Some traders betted on LUNA to recover on the futures market, but after prices continued nosediving, liquidations amounted to $106 million. Read more here
  • Contagion spreads to algos: UST’s crisis puts immense pressure on other algorithmic stablecoins. Neutrino USD (USDN), the stablecoin of the Waves decentralized finance protocol, seems to be the first to shake: USDN dropped below 80 cents on certain exchanges from its $1 peg, while the protocol's native token, WAVES, fell by 26% in a day. Delphi Digital reported earlier this week that the FRAX, FEI and USDN stablecoins are facing the same danger as UST because of their similarity in design and weak points. Read more here
  • Stepn up: Stepn, a "move-to-earn" application on the Solana (SOL) blockchain that allows users to get cryptocurrency rewards from walking or jogging, is getting traction in digital-asset markets. The fitness app has grown to more than 300,000 daily active users in a few months, while its native token GMT is traded at 17 times its launch price in March. “This actually has value in the long run,” Fundstrat’s Will McEvoy said. Read more here

Relevant insight

Other markets

Most digital assets in the CoinDesk 20 ended the day lower.

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Internet Computer ICP −30.1% Computing
Solana SOL −28.3% Smart Contract Platform
Polygon MATIC −27.4% Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.


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Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

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