The stablecoins Luna and TerraUST have been some of the hardest hit, plunging by 99% and 58% respectively.
Stablecoins are backed by other assets in an attempt to limit volatility.
According to Coindesk, the price of UST is “algorithmically stabilized” through smart contracts involving its sister coin.
Bitcoin backs Luna, and Luna, in turn, stabilizes UST.
UST is pegged at $1 through a process of destroying Luna coins and minting UST.
Theoretically, this process is supposed to make Luna more valuable as it becomes more scarce and keep the price of UST from moving above its $1 benchmark.
A drop in UST price created an unstable market for the stablecoin, however, sending it plunging below $0.50.
“When that peg was broken, it shook investor confidence not just in stablecoins but across decentralized finance,” Luzi Ann Javier, markets editor at Finder.com, told The Sun.
“It’s also raising concerns that regulators around the world would quickly step in. That could spell more trouble, should the tokens survive this rut.”
Regulation may be coming sooner than some investors expect, spurred in part by this recent bear market.
A global crypto regulatory body may launch within the next year, chair of the watchdog International Organization of Securities Commissions Ashley Alder said in a podcast on Thursday.