Last week the cryptocurrency market lost $320 billion of value in a single day.
A loss of confidence in two stablecoins, a type of cryptocurrency linked to real world assets such as cash or bonds, meant to be protected from volatility, caused the cryptocurrency market to fall about 30%.
But New Zealand crypto exchanges say they have seen an increase in local investors buying into the volatile market.
Financial experts wonder if a 30% crash in value does not alter the behaviour of cryptocurrency investors, will anything?
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What happened?
Cryptocurrencies, such as bitcoin or ethereum, are lines of code designed to function as digital currency.
A stablecoin is a type of cryptocurrency in which the value is tied to another currency or financial instrument, in an attempt to avoid the volatility of broader crypto market.
But last week the value of two important stablecoins dived. Terra, a stablecoin supposedly matched to the value of the United States dollar was trading at US0.13 cents (NZ0.2c) last week. Another stablecoin, luna, crashed, trading at only a fraction of a cent.
AP
Stablecoins are a type of cryptocurrency designed to avoid volatility. But last week the crash of two stablecoins shook investor confidence in the entire cryptocurrency market.
After the value of two supposedly stable cryptocurrencies fell so drastically, panic in the wider crypto market sparked widespread withdrawals.
By the end of the week the entire crypto market lost US$400b (NZ$634b) in value.
How are New Zealand investors reacting?
Easy Crypto chief executive Janine Grainger says New Zealand investors reacted by buying more crypto.
May is already the highest trading volume month for Easy Crypto this year.
Between 90 and 95% of trades are people buying, but value remains…
