The controversial stablecoinTerraUSD sister tokens are basically worthless.
According to CoinGecko data, Luna plunged to $ 0 on Friday, showing a surprising collapse of cryptocurrencies that were worth more than $ 100 at one point.
The demise of the controversial stablecoin venture Terra has led to the collapse of the crypto market, which has been wiped out. Billions of dollars Worth a day.
TerraUSD Or UST is supposed to be fixed one-to-one with the US dollar. However, according to CoinGecko data, UST lost the peg and was trading at about 12 cents on Friday.
Bitcoin Staging rebound On Friday, despite the ongoing predicament of Stablecoin TerraUSD, which is causing panic in the crypto market, it soared above $ 30,000.Investors may have gained some comfort from the news that Tether, the world’s largest stablecoin, had. Regained the dollar peg After falling below $ 1 for a few hours.
Bitcoin, the world’s largest cryptocurrency, rose 5.3% to the last trade at around $ 30,046.85 after falling to levels not seen earlier this week in late 2020, according to Coin Metrics data.
However, digital currencies have fallen by more than 15% in a week.
UST and Luna are linked. The UST is called the algorithm’s stablecoin, and its $ 1 peg is to be managed by the underlying code.It is fundamentally different from other stablecoins like Tether When USDC Backed by real-world assets such as bonds. UST has no actual reserves.
The UST algorithm is Complex system for creating and writing tokens To maintain price stability. UST tokens are created by destroying some of the associated cryptocurrencies Luna to maintain the dollar peg.
However, extreme market volatility has tried UST and failed to maintain the pegs.
Even more complicated is the fact that the Terra blockchain that underpins UST and luna stopped processing transactions twice within 24 hours.
Meanwhile, Binance, the world’s largest cryptocurrency exchange, temporarily delisted UST and Luna on Friday.
Binance CEO Changpeng Zhao said the company “always aims to be neutral,” but “this time it will break that rule.”
However, as of 10:30 am on ET, trading between UST and Luna was reopening on Binance.
Direct transfers over the network will no longer be allowed after Terra announces that it will resume validation of new transactions on the blockchain. Users are encouraged to use other channels instead.
In addition to the UST story, the crypto market has been hit by many other headwinds, including the higher ones. Inflation and interest rate hikes Because of that Sold out on the global stock market I passed the filter. Cryptocurrency price fluctuations correlate with the stock market.
“The Luna / UST situation has hit market confidence considerably. Overall, most cryptocurrencies are down. [more than] 50%. Combining this with global inflation and fears of growth is generally not a precursor to cryptocurrencies, “said Vijay Ayar, vice president of corporate development and international affairs for cryptocurrency exchange Reno. increase.
Even the rebound of big Bitcoin may not be sustainable.
“In such markets, we usually see bounces up to 10-30%. They usually withstand market bounces and test previous support levels as resistance,” Ayyar said.