Terra’s stablecoin, UST, falls below $1 for the first time since its launchThe value of TerraUSD has slipped below the dollar mark, hitting a low of $0.69, exacerbating the crypto market’s overall decline.
The Luna Foundation Guard (LFG), a non-profit organisation responsible for maintaining the peg, announced its intention to lend $750m in Bitcoin and $750m UST to traders to “proactively defend the stability of the $UST peg and Terra’s economy in general”. Terra’s own asset, Luna, which is supposed to help UST maintain its one-to-one peg to the dollar, crashed by more than 60% during the worst of the de-pegging cycle.
In recent months, Terra has been buying Bitcoin and Avalanche for the UST treasury, and in very volatile times this tactic can come under pressure. If the depegging of UST continues, LFG may be forced to liquidate its bitcoin positions, which could send major shockwaves through the already fragile crypto market.
TFC POV: Stablcoin might not be able to serve its purpose and what would that mean for the other stablecoins in the market. This will mean a BIG question mark for most crypto investors and confidence in cryptocurrencies could deteriorate further.
TFC Team
thefirm.sg