After the woes of the TerraUSD stablecoin triggered a flight from many popular digital tokens, Cryptocurrencies steadied. On Thursday, Bitcoin climbed back to about $29,000. Some tokens like Avalanche and Solana that support some key decentralized finance protocols posted double-digit percentages of profit.

Luna token is struggling and the TerraUSD stablecoin was still below its $1 intended peg.  Sentiment remains fragile and the crypto sector overall is suffering from heavy losses for the week.

“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.”

Also known as UST, The TerraUSD algorithmic stablecoin has been bouncing between 20 cents and 90 cents. 

After it crashed from its dollar peg, backers of the coin are trying to raise about $1.5 billion to support the token, according to the founder of a firm that was approached about the deal.

“Is the market getting spooked by what’s happening with Terra? The answer is yes,” Craig W. Johnson, chief market technician at Piper Sandler, said by phone. “Money-market funds are important to investors and right now we’re questioning the third-largest money-market fund in crypto land. People did not think we were going to break the buck on that and that’s clearly happened.”

Also hurt by increased US inflation, Crypto sentiment points to aggressive interest-rate hikes. “There is extreme fear across the crypto market,” said Marcus Sotiriou, an analyst at the UK-based digital-asset broker GlobalBlock.

For Bitcoin, the area around $30,000 had been an “especially sensitive zone”, wrote James Malcolm, head of foreign exchange and crypto research at UBS. That’s where mining economics decline, “which could potentially lead to increased coin sales by this key cohort,” he said.

Investors have been skeptical about the prospects of the crypto exchange in a bear-market as Coinbase Global Inc. shares and bonds fell to new lows on Wednesday. The company warned trading volume and monthly transacting users in the second quarter is expected to be lower in comparison to the first. They also reported on lower-than-expected revenues yesterday.

Piper Sandler‘s Johnson says that’s another concern for crypto investors right now. “It’s the largest exchange here in the United States and they just turned a loss,” he said, adding that Terra’s troubles are all “snowballing in crypto land.”

“Ultimately every investor needs to size positions based on their risk level and time horizon,” said Alex Tapscott, managing director of the digital asset group at Ninepoint Partners. “We believe Bitcoin will recover and that we’re still in the early stages of this new internet of value. Keep calm and HODL.”


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