The crypto market continues to turmoil, the UST stablecoin decouples from the US dollar again and falls to a new all-time low

The TerraUSD (UST) stablecoin once again decoupled from the U.S. dollar fell to a record low of $0.68 on Monday amid continued volatility in the cryptocurrency market. UST had previously fallen to $0.985 on Saturday before recovering to $1 on Sunday. Terra (LUNA) has fallen even more, down 33.3% over the past 24 hours.

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As previously reported by BitTweet, the Luna Foundation Guard (LFG) has announced that it will “loan” its $1.5 billion Bitcoin reserves to professional market makers to maintain the peg.

Monday’s event was “the biggest stress test the system has ever faced,” said José Maria Macedo, a partner at Delphi Digital and a member of the LFG’s board of governors, and because of LFG’s reserves, there’s no need to worry too much.

Professional market makers are apparently using Bitcoin reserves to defend the UST peg to the U.S. dollar, but there is no specific link between the LFG reserves and Terra’s on-chain minting and burning mechanism. There have been proposals to incorporate Terra’s Bitcoin reserves into its underlying smart contract, but as of right now, users cannot directly exchange UST or LUNA for Bitcoin.

Swan Bitcoin CEO Cory Klippsten called it a “confidence game” in response to the outsized influence of Terra’s founders and big-money backers in aggressive efforts to help the currency stay peg.

More than $830 million has been liquidated from the crypto market in the past 24 hours, with Bitcoin’s price falling to its lowest point since January 2022, currently at $31,112. Bitcoin has lost 20.2% in the past 7 days and 9% in the past 24 hours.

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UST and LUNA Both LFG’s public Bitcoin and Ethereum wallets have been drained after it was revealed that the Luna Foundation Guard (LFG) would lend $1.5 billion in BTC and UST. The LFG bitcoin wallet once held 42,530.82 bitcoins, but sent all bitcoins to another wallet in a transaction.

While other stablecoin assets like USDC and USDT also felt the pinch, the declines were much smaller, with Tether falling to $0.995691 on Monday, while USDC fell to $0.994630.

BUSD is trading at $0.996616, while DAI is trading at $0.995420. With the exception of UST, most dollar-pegged stablecoins trade between $0.975328 and $0.99.

Terraform Labs co-founder Do Kwon tweeted: “Deploy more money.”

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Elsewhere, stocks also fell, with the Nasdaq Composite down about 3.5% at press time. At press time, the Nasdaq Composite was down more than 4% and had lost 493 points since the opening bell. The S&P 500 and Dow fell 3% and 1.8%, respectively. Market action today extended last week’s losses, which observers attributed to macro factors such as the Ukraine war and last week’s Fed rate hike.

Shares of Coinbase fell to new lows on Monday amid a broad decline in U.S. stocks. At press time, $COIN is trading at $82.31, having previously fallen to a low of $81.84, down more than 20% since the opening bell.

Posted by:CoinYuppie,Reprinted with attribution to:
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