On Monday, May 9, 2022, the stablecoin Terased (UST) lost its parity with the US Dollar and fell to an all-time low of $0.66 per unit. Stablecoins have been one of the most topical discussions in crypto during the past 24 hours, as many are betting on whether it will fail or recover. However, as of 9:15 am (ET) on Tuesday, the stablecoin managed to climb back to $0.934 per unit.
UST stablecoin drops to $0.66 per unit, rumors spread like wildfire
The Terra blockchain project has suffered in recent days, as the network’s native asset LUNA is down 43.6% against the US Dollar during the past 24 hours. Moreover, the stablecoin Terased (UST) is also facing intense pressure as the coin’s value declined from $0.99 to lows of $0.66 per unit. On some exchanges, UST fell as low as $0.62 per unit during periods of high selling. Do Kwon, co-founder of Terra. just before UST fell $0.09 lower than the $1 peg told the public That the team was “deploying more capital.”
The A-Team is gathering.
— Terra (UST) Powered by Luna (@terra_money) 9 May 2022
During Monday evening, the Luna Foundation Guard (LFG) emptied the LFG bitcoin wallet, which once held approximately 70,736.37 BTC. Currently, there is zero bitcoin in the wallet as it has been drained. The same can be said for the LFG Gnosis secure address, as $143 million was held in an Ethereum address on May 3. Today, the wallet holds $135.58 in Ether and a few other ERC20 tokens with smaller denominations. While LFG and Do Kwon told the public on Monday that $1.5 billion in bitcoin and UST will be given to market makers, current moves are less transparent.
While UST fell to $0.66 per unit, a large number of theories revolved around the crypto industry. there has been claims that the multinational hedge fund and financial services company Citadel was Involved, reports forward claim The Binance order book was halted during the UST selloff. For a short time, Binance halted LUNA and UST withdrawals. Additionally, there has been talk of well-known crypto funds pulling out Terra as well, bringing billions back into the stablecoin ecosystem.
“There is a rumor circulating about Jump, Alameda, etc offering another $2B to ‘bail’ UST,” said BlockCrypto head of research Larry Cermak tweeted on Monday evening. “Whether this rumor is true or not, it makes perfect sense for them to spread it. The biggest question here is that, even if they can make it up to $1 by some miracle, the trust is irrevocably gone.
People Question Stablecoin Project After UST Bounces to $0.93, Anchor TVL Slips 43% in One Day
Discussions about people losing faith in LUNA, UST, and Terra in general have spread across social media. “No matter how it ends, I don’t want people to call UST decentralized again,” said bitcoin advocate Hasu. tweeted on Monday. “Even with little collateral backing it is transparent and controlled by one party. Used to conduct discretionary open market operations. It is 10 times worse than the Fed,” Hsu said.
I $UST Breaking the stable currency peg…
Same story with any central bank trying to defend a currency peg: Once the market has cast a no-confidence vote, your prop-up fund rarely has enough assets to prevent the dam from breaking. Is. pic.twitter.com/x3llQtABmv— Tuur Demeester (@TuurDemeester) 9 May 2022
Investor Lynn Alden also made a statement about the aftermath of the Terra disaster. he predicted it might happen last month. “Terra’s Multi-Billion Dollar Algorithmic Stablecoin UST Blasted Today,” Alden said, “In addition to destroying the value of Luna, they used their bitcoin reserves to protect pegs, like an emerging market using their gold reserves to protect their FX.”
UST is recovering from losses during the overnight trading session and Tuesday morning trading session. So far, terrausd (UST) has managed to climb back to $0.934 per unit, or 6% below $1 parity. Terra co-founder Do Kwon has not tweeted saying that the ‘A-Team’ was deploying capital, even though the co-founders are well-known for defending their project. Also, LFG hasn’t updated the public either. last tweet, Which states that it will provide more updates.
Mark my words. The failure of UST will be used by policymakers as proof of death and champion CBDCs to regulate stablecoins.
This is not good.
— Dennis Porter (@Dennis_Porter_) 10 May 2022
In addition to problems with the price of Luna and UST, decentralized finance (DeFi) lending protocol Anchor has lost 43.7% of its Total Value Locked (TVL) over the past 24 hours. At the time of writing, Anchor has TVL of approximately $7.22 billion and avalanche-based collateral of $95.08 million. The anchor was once the third-highest Diffie Protocol, and on Tuesday it has dropped to sixth.
People at Tradefi are making fun of the UST… even though their stablecoin is not realizing it is down 8% this year.
— Eric Voorhees (@ErikVoorhees) 10 May 2022
Many wonder what will happen if the UST reaches $1 parity with confidence in the stablecoin shaken. Many UST owners may be waiting for the $0.99 area or closer to that range, so they can exit the stablecoin and move into something else. At $0.934141, UST is close to $1 parity, but an investment of 5,000 UST would only equal $4,670.70 at current prices.
What do you think about the issues with the Terra project and the recent UST de-pegging? Let us know what you think about this topic in the comment section below.
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