Both terraUSD (UST) and terra (LUNA) still can’t find their price bottom today.
UST, the algorithmic stablecoin built on the Terra blockchain, is continuing to collapse on Wednesday, after initially losing its US dollar peg on Monday. The price crash comes as Terra founder Do Kwon has gone silent, with no updates on his Twitter profile for the past 8 hours, as of 08:00 UTC.
The collapse in the UST price today comes after the coin trimmed some losses yesterday, as more capital was deployed to defend its USD 1 peg. However, the recovery did not last long, with UST again falling hard in the market by Wednesday morning UTC time.
The latest updates from Do Kwon, the founder of Terraform Labs, the organization behind the stablecoin, was that he was “close to announcing a recovery plan for UST,” while telling his followers to “hang tight.”
8 hours later, a new update said “Getting close … stay strong, lunatics.”
As of 08:00 UTC, no further updates on the promised “recovery plan” have been shared by Do Kwon. In the meantime, the price of UST has collapsed to USD 0.35, hitting as low as USD 0.23 earlier in the morning in Europe.
UST past 7 days:
Meanwhile, the price of Terra’s native token LUNA, which together with bitcoin (BTC) backs the stablecoin, has fallen by a massive 85% over the past 24 hours to USD 4.74.
Luna Foundation Guard (LFG), the non-profit organization dedicated to maintaining the stability of the UST peg, has already sent its entire holding of BTC to a trading firm tasked with selling BTC to defend the peg. As recently as last week, the LFG held BTC 80,394 in its reserves, Arcane Research wrote in a report.
The crash today also follows reports from yesterday that LFG is seeking more than USD 1bn to shore up the UST stablecoin.
Citing unnamed sources, The Block reported yesterday that LFG is looking to secure fresh capital from some of the crypto industry’s largest investment firms and market makers. The deal would reportedly allow investors to purchase LUNA tokens at a 50% discount, subject to a two-year vesting schedule.
Meanwhile, the drama surrounding the stablecoin has also reached the highest levels of policymakers in Washington DC, with Treasury Secretary Janet Yellen saying the de-pegging shows the urgency to have a regulatory framework on stablecoins.
“I think [the de-pegging] simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that’s appropriate,” Yellen was quoted by Bloomberg as saying in a testimony on Tuesday.
Source: Cryptonews
