Luna’s Crash More Negative For Ether Than Bitcoin As Musk Warns Of Trouble Ahead

0

Last Updated on 10 June 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
View all posts

The crypto story of 2020 was probably that Bitcoin hit $20,000k and got institutional investment (Jack Dorsey and Paypal were the first), that of 2021 would be a choice between the Bitcoin ATH of $69k, Dogecoin’s rise in the first half of the year or Shiba Inu’s stellar rise in the second half.

As to 2022, so far the stand out story of the year was unfortunately the demise of Luna (and its linked stablecoin terraUSD). On top of that, the crash of Luna seems to also have been able to delay the coming of the flippening.

For those of you that don’t know, the flippening is a moment in the future when Ethereum’s market cap will outgrow that of Bitcoin. As crypto grew in 2021, many analysts were pointing out that the flippening couldn’t be far off. However, Luna’s demise has also meant that traders have pulled away from investments linked to decentralized finance, which is what Ethereum’s blockchain is heavily used for.

As such, it was interesting to see that in the past 30 days, Ether has declined much faster than Bitcoin. The world’s largest crypto coin lost some 20% of it’s value in May, Ether about a third.

Advertentie.

Ethereum like Netflix

Sipho Arntzen, an analyst at Swiss private bank Julius Baer, explained earlier this week that after the demise of Luna and Terra, “confidence in the crypto ecosystem and decentralized finance remains at historically low levels”, before continuing by stating that his bank “expects no swift recovery for now”.

As Ethereum primarily aims to provide the infrastructure for the emerging world of decentralised apps, we believe that these drawdowns are symptomatic of a loss in confidence in the broader DeFi ecosystem.

Arntzen explained further

Ilan Solot of Tagus Capital summarized it best when he stated that:

Ethereum, like Netflix or any stock, reflects expectation of future demand.

If the Federal Reserve is tightening monetary policy, the world is in recession, and people need to pay $4.5 per gallon of gas, they’ll have less to invest in DeFi or spend on blockchain games.

Musk feeling ‘Super Bad’

A further sign of possible trouble ahead came with an internal email from Elon Musk that was highlighted in worldwide business media on Friday. According to Reuters, Elon Musk has a “super bad feeling” about the economy.

Musk’s bad feeling is shared by many people.

Carsten Brzeski, analyst at Dutch bank ING said

But we are not talking about global recession. We expect a cooling of the global economy towards the end of the year. The U.S. will cool off, while China and Europe are not going to rebound.

puhhha / Depositphotos.com