A crash of stablecoin TerraUSD (UST) has sent the crypto market into a blind panic. The system cryptocurrency TerraUSD should always be good for 1 dollar, but today it dipped below 30 cents.
That big difference of 70 cents led to a wave of panic selling and also depressed the price of Bitcoin. Sister coin LUNA crashes cozily and loses 95 percent of its value in 24 hours. And yesterday was not a holiday for crypto investors either.
Stablecoins like the UST are the cement of all crypto trading. UST must be held at $1 by collateral in Bitcoins and other cryptocurrencies. When the UST went down, Luna Foundation Guard sold all its Bitcoins to boost the UST again, but sees little effect on the price of the UST. Bitcoin, on the other hand, fell due to this action to its lowest price in months, below 30,000.
It is not without risk for a stablecoin like the UST to fall. Terra offers a whopping 19.5 percent return to investors who lock their stablecoins in the blockchain. That is a huge return that has ensured that the coin has quickly become one of the most popular stablecoins. Before both sister coins crashed, the whole was worth more than $50 billion the FD calculates for us† That is more than systemic banks ING and ABN Amro put together. If that collapses, we can at least imagine that the misery will not be limited to two crypto coins, but the entire market will hit the panic button.
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