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.
Tether, the most popular stablecoin, also fell off its US dollar peg - to an all-time low of $0.95.
The term "cryptocrash" has been trending on Twitter and Google Search.
And the combined market value of all crypto-currencies is now reportedly $1.12trillion, about a third of its November value, with more than 35% of that loss coming this week.
One Bitcoin is now worth about $27,000, its lowest value since December 2020 and down from a high of nearly $70,000 late last year.
Ethereum, the second largest coin by value, has lost 20% of its value in 24 hours.
"The collapse of TerraUSD has started what we used to call 'the panics', when major financial institutions sold off large chunks of assets and everyone else tried to take their money out as quickly as they could," economist Frances Coppola said.
"Panic is exactly what's going on here."