'Evil genius' may have caused Terra and Luna cryptocurrencies to crash in a 'death spiral'

It's been a stressful week for those who own bitcoin and other cryptocurrencies, as they watched billions of dollars get wiped off the value of their assets.

Bitcoin (which has often been touted as "digital gold" or a "hedge against inflation") plunged below $US25,500 this week — a far cry from the record high $US69,000 price tag it commanded back in November.

The wider crypto market (which includes thousands of digital currencies and tokens) has seen its value plunge by more than 50 per cent since then.

Lately, people have been dumping their riskier, speculative assets like crypto, tech stocks, and shares in companies which are still in their "growth" phase (and not paying dividends).

It comes as the US Federal Reserve (and central banks globally) hike interest rates aggressively — and remove trillions of dollars worth of COVID-19 stimulus, in a desperate bid to keep a lid on decades-high inflation.

Apart from those "big picture" economic factors, analysts say the crash of the TerraUSD "stablecoin" (or UST) — and its potential contagion effect — was the main reason behind this week's cryptocurrency sell-off.

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