The TerraUSD stablecoin was still below it $1 intended peg, while affiliated token Luna struggled. The crypto sector overall is nursing heavy losses for the week and sentiment remains fragile.“UST’s collapse undercuts confidence in all liquidity protocols,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “If UST can fail, maybe Aave can too. Sort of like when Bear Stearns failed, it focused people’s attention on whether Lehman would fail.
Crypto sentiment was also hurt by elevated US inflation, which points to aggressive interest-rate hikes — an unfavorable environment for risk assets. “There is extreme fear across the crypto market,” said Marcus Sotiriou, an analyst at the UK-based digital-asset broker GlobalBlock. Meanwhile, Coinbase Global Inc. shares and bonds fell to new lows Wednesday, signaling investor skepticism about the prospects of the crypto exchange in a bear-market. The company reported lower-than-expected revenues yesterday, and warned trading volume and monthly transacting users in the second quarter is expected to be lower than in the first.