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The Terra ecosystem’s stablecoin UST has lost its 1-for-1 peg to the USD, while Bitcoin continues to sell off below the $30,000 threshold.
Stablecoin UST officially de-peg to 0.6 USD
In the context that the cryptocurrency market is constantly wobbling and UST is strongly affected by this wave, Terraform Labs and the Luna Foundation Guard (LFG) hedge fund have made many strong moves to retain anchor 1. exchange 1 with USD of this stablecoin. Earlier on May 8, UST had a worrying drop when it reached the level of $0.9853.
Noon on May 9, LFG announced to spend $1.5 billion (including 750 million USD in Bitcoin and 750 million UST) from the fund and sent to OTC and MM (market maker) trading units to perform trading operations to regain the original anchor price for UST. In essence, this is the act of “selling Bitcoin” by Luna Foundation Guard to reduce the supply of UST in the market, pulling the stablecoin price up again.
At dawn on May 10, LFG announced that it had spent an additional 37,000 BTC (more than $ 1.1 billion) to continue to be a traction for UST. The amount of BTC held by the fund is now just over 28,200 BTC (worth about 854 million USD), much lower than the 3 billion USD worth of Bitcoin that the fund has owned since before the drop.
However, the adjustment measures of Luna Foundation Guard did not achieve the desired effect when UST gradually lost its initial value. On May 9, UST fell to $0.98, then broke down again and is currently at $0.605 – a loss of nearly 40% from the $1 threshold it must maintain.
Followed by moves from Luna Foundation Guard when it transferred the remaining BTC in the wallet to the Binance exchange, which means that the fund’s BTC wallet is currently empty.
The constant negative news related to the Terra ecosystem means that the price of LUNA plummets. This token has lost nearly 60% of its value to only 26.54 USD. Meanwhile, the amount of UST money deposited on the Anchor Protocol lending protocol – the heart of the Terra ecosystem when it provides 18% APY interest – has also “evaporated” 48% from $ 14 billion on 8th. /05 returned to only 7.3 billion USD. The massive withdrawal of UST by users caused Anchor’s APY to rise again by 20%.
According to DeFi Llama, the Terra system’s lockout value (TVL) is decreasing by nearly 37% and only $13.32 billion remains. Before that time, TVL value hit a record high of $31 billion in early April. To this day, Anchor still accounts for more than 568% of Terra’s TVL.
Bitcoin drops below the $30,000 mark
Luna Foundation Guard’s Bitcoin sell-off has caused panic in the market, putting selling pressure on the entire cryptocurrency market, which has been in the red for several days in a row.
See also: All markets were on fire when the Fed announced an interest rate increase.
After hitting $33,000 on May 9, Bitcoin continued to bottom out as it reached $29,730 – this new 2022 low and the lowest value since mid-July 2021. The 24-hour trading volume spiked to $72.3 billion.
Other Altcoins also hit the bottom of 2022, such as ETH falling to 2,200 USD, BNB 289 USD, SOL 60.13 USD, AVAX 40.00 USD, NEAR 8.86 USD, etc.
According to Coinglass statistics, in the past 12 hours, there have been nearly 829 million USD of cryptocurrencies being liquidated, while the number of 24 hours is 1.11 billion USD, concentrated mainly in BTC, ETH and LUNA. The rate of orders being liquidated is up to 66% – 75% are long orders.
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