2nd largest digital currency loses 20% of its value in 24 hours

London, May 12

The world's second largest cryptocurrency Ethereum has joined the cryptocurrency crash - plummeting in value by 20 per cent over the last 24 hours - as the digital currency downturn hammers investors who bought during the Covid years, Daily Mail reported.

Cryptocurrencies have sharply declined in value during the past few days as fears for the global economy spread and investors started to sell off risky assets.

However, investors in more traditional stocks are also hurting, with the US tech stocks also plunging in recent weeks, including Amazon which has fallen 30 per cent in a month.

Many amateur investors took to buying stocks and digital currencies during the Covid pandemic and made money because values were generally rising in a so-called bear market.

Ethereum has now lost more than half of its value this year, Bitcoin has shed a third of its value since January and Luna with 98 per cent of its value wiped out overnight with suicide hotlines pinned to the currency's Reddit page as a result, Daily Mail reported.

Popular digital currency exchange Coinbase warned users could lose all of their money if the company goes bankrupt - after the downturn led to a 27 per cent fall in its share price, the report said.

Stablecoins are digital tokens pegged to the value of traditional assets, such as the US dollar which are supposed to be less volatile than other cryptocurrencies like Bitcoin.

Stablecoins like Luna are popular in times of turmoil in crypto markets and are often used by traders to move funds around and speculate on other cryptocurrencies.

Luna lost its pegging to the dollar this week, falling below $1 per coin, causing prices to drop dramatically as the industry panicked (similar to a run on a bank).

"The Terra incident is causing an industry-based panic, as Terra is the world's third-biggest stable coin," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, Daily Mail reported.