On Monday, May 9, 2022, the stablecoin terrausd (UST) lost parity with the U.S. dollar and fell to an all-time low of $0.66 per unit. The stablecoin has been one of the hottest discussions in the crypto space over the past 24 hours, as many have been betting on whether it will fail or recover. However, by 9:15 a.m. ET on Tuesday, the stablecoin had managed to recover to $0.934 per unit.
**This article was updated at 1:00pm ET to include commentary from unnamed sources regarding specific claims on social media.
UST stablecoin plummets to $0.66 per unit, rumor spreads like wildfire
The Terra blockchain project has been affected recently as the network’s native asset, LUNA, has lost 43.6% against the U.S. dollar over the past 24 hours.Additionally, the stablecoin terrausd (UST) has also been processed Enormous pressure As the value of the coin plummeted from $0.99 per unit to a low of $0.66. On some exchanges, UST fell to $0.62 per unit during the extreme sell-off. Just before UST fell $0.09 below its $1 peg, Terra co-founder Do Kwon tell the public The team is “deploying more money”.
The A-Team is gathering.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 9, 2022
Over the course of Monday night, the Luna Foundation Guard (LFG) was emptied LFG Bitcoin Wallet once held approximately 70,736.37 bitcoin. Currently, there is zero bitcoin in the wallet because it has been drained.for LFG Gnosis Safe Address, because Ethereum addresses held $143 million on May 3. Today, the wallet holds $135.58 in ether, along with a few other ERC20 tokens of lesser value. While LFG and Do Kwon told the public on Monday that $1.5 billion in bitcoin and UST would be lent to market makers, the current move is less transparent.
While UST plummeted to $0.66 per unit, a ton of theory revolved around the crypto industry.Had claim Multinational hedge fund and financial services firm Citadel involve. However, a person familiar with the company’s operations told Bitcoin.com News on Tuesday:
From a factual standpoint, Citadel does not trade stablecoins, including UST.
Report further claims Binance order book suspended during UST sell-off.In a short period of time, Binance pause LUNA and UST withdrawals. Additionally, there are rumors that a prominent crypto fund is also saving Terra by sending billions back into the stablecoin ecosystem.
“There are rumors that Jump, Alameda, etc. are offering another $2B to ‘bail out’ UST,” Larry Cermak, head of research at blockcrypto tweet Monday night. “Whether this rumor is true or not, it makes perfect sense for them to spread it. The big problem here is that even if they can miraculously raise it to $1, that trust will irreversibly disappear.”
Anchor TVL slumps 43% in a single day after UST bounces back to $0.93 as people question trust in stablecoin projects
In general, discussions about people’s loss of trust in LUNA, UST and Terra have spread across social media. “Whatever the outcome, I don’t want people to call UST decentralized again,” Bitcoin advocate Hasu tweet on Monday. “Even the small amount of collateral it has backed is opaque and controlled by one party. Used to perform discretionary open market operations. That’s 10 times worse than the Fed,” Hasselblad added.
😶 $UST Stablecoin peg breaks…
It’s the same story as any central bank trying to defend a currency peg: once the market casts a vote of no confidence, your backing fund rarely has enough assets to keep the dam from bursting. pic.twitter.com/x3llQtABmv
— TuurDemeester (@TuurDemeester) May 9, 2022
investor Lynn Alden Statements about the Terra disaster were also issued afterwards. She predicts this may happen last month. “Terra’s multi-billion dollar algorithmic stablecoin UST exploded today,” Alden said. “In addition to destroying the value of LUNA, they are using their bitcoin reserves to try to defend the peg, just like a shaky emerging market uses its gold reserves to defend its foreign exchange.”
UST has been recovering from losses during the overnight session and Tuesday morning’s session. So far, terrausd (UST) has managed to recover to $0.934 per unit, or 6% below parity at $1. Terra co-founder Do Kwon hasn’t tweeted since saying “Team A” is deploying funds, though the co-founder is known for defending his project.At the same time, LFG has not been updated to the public since its launch. last tweet, It says more updates will be provided.
Mark my words. The failure of the UST will be used by policymakers as evidence to regulate stablecoins and support CBDCs.
Not very good.
— Dennis Porter (@Dennis_Porter_) May 10, 2022
In addition to the price issues with LUNA and UST, decentralized finance (defi) lending protocol Anchor has lost 43.7% of its total value locked (TVL) in the past 24 hours. At the time of writing, Anchor’s TVL is around $7.22 billion, of which $95.08 million is Avalanche-based collateral. Anchor, once the third-largest defi protocol, fell to sixth on Tuesday.
People in the trade make fun of UST… not realizing that their stablecoin is also down 8% this year.
— Erik Voorhees (@ErikVoorhees) May 10, 2022
Many wondered what would happen if UST regained $1 parity in such a shaky stablecoin. Many UST owners are probably waiting for the $0.99 area or close to that range so they can cash out of the stablecoin and move to something else. UST is priced at $0.934141, which is close to parity of $1, but a $5,000 investment is only equivalent to $4,670.70 at current prices.
How do you feel about the issues with the Terra project and the recent decoupling of the UST? Let us know what you think about this topic in the comments section below.
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