Monday’s price drop of Terra (LUNA) continues and now falls below $16 a piece. Meanwhile, the pegged to the dollar stablecoin The network’s TerraUSD (UST) continued to trade as low as $0.8, well below the intended $1.00 fix.
- LUNA is trading at just $15.84 at the time of writing, down 63.13% over the past 24 hours and down 80.74% on the week.
- the cryptocurrency serves double as a governance token for the TerraBlockchain and as a reserve asset to maintain the stability of their various stablecoins.
- The most popular stablecoin — TerraUSD — started drifting away from its dollar peg on Sunday, the Luna Foundation Guard (LFG) noted. To fix the problem, the organization tried some of their Bitcoin-Deploy reserves in the market to support the price of UST.
- However, these reserves failed to save the stablecoin and its value has drifted as low as $0.69.
- To make matters worse, his crushed value has a massive one arbitrage-Opportunity created within the Terra ecosystem. Since each UST is always convertible for around a dollar of LUNA, traders have an incentive to trade their stablecoins only to have their LUNA to market at a profit shortly thereafter.
- This likely contributed to the death spiral of LUNA’s price, which has fallen significantly even alongside other darn cryptos. In comparison, Bitcoin and Ethereum are down just 18% and 17% respectively this week.
- Amid the chaos, Binance was forced to halt UST exchange withdrawals, citing “network slowness and congestion.”
- Janet Yellen – United States Secretary of the Treasury – even mentioned de-pegging TerraUSD during a Senate hearing today. She believes this illustrates how stablecoins pose “risks to financial stability” and “a [regulatory] Frame”.
- Terra is now the 20th largest crypto after market capitalizationalthough it was in the top 10 just a few days ago.
- Terra co-founder Do Kwon stated today that he will soon unveil a plan to regain UST’s bond.
Source: Crypto News Deutsch