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Things before the opening bell

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Terra’s implosion is shaking confidence in crypto. The entire market has turned red since the collapse of Luna and its sister stablecoin, Terra, and some say this could be crypto’s “Lehman Brothers moment.”

GlobalBlock analyst Marcus Sotiriou is less focused on what has already happened, however, he sees a potentially larger catastrophe looming.

“A collapse of USDT [Tether] would be [‘the Lehman Brothers moment’] though, and we have seen the largest stablecoin by market cap wobble over the past 24 hours,” Sotiriou told Insider.

This week’s turmoil signals potentially systemic issues. Investors often peg stablecoins as essential to growth in the sector, but belief in their viability is being tested.

Terra’s collapse shows how these tokens can have all the risk of crypto without any of the upside.

Now, people are realizing there is nothing to back up the value of these tokens other than the hope that there will always be more buyers than sellers — a bleak rationale to rely on during a full-blown bear market.

The move in crypto feels different this time. Rather than being sparked by an offhand comment about more regulation or a temporary skittishness among investors, this week’s sell-off has roots in the underlying mechanisms of the market, which appear to be faltering.

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