The Terra Luna token fell from a high of $118 (£96), last month, to $0.09 on Thursday.
The collapse had a knock-on effect on a linked token, TerraUSD, which is normally stable.
And spooked investors are now pulling out of major crypto-currencies, sending markets plummeting.
The companies behind stablecoins try to ensure they remain in parity with assets such as the US dollar - with one token equalling $1, for example.
But on Thursday TerraUSD fell to $0.4 according to the trading website Coin Market Cap.