Bitcoin (BTC) fell below $30,000 for the first time in ten months on May 10 as turmoil surrounding blockchain protocol Terra continued.
Bitcoin price jumps to $29,700
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD lows of $29,731 on Bitstamp.
The first trip below $30,000 since July 2021, overnight BTC price action came amid both bearish stock markets and new troubles for Terra’s US dollar stablecoin, TerraUSD (UST).
As Cointelegraph continues to report, UST underwent a mass selling attack this week, culminating in Terra using its massive 750 million BTC reserves to shore up its USD peg.
However, initial liquidity moves to mitigate the impact of the threat proved insufficient and UST subsequently fell to lows of $0.67, according to data from CoinMarketCap.
At the same time, BTC/UST began to behave erratically on major exchange Binance, hitting highs of more than $42,000 while other bitcoin-dollar markets struggled to hold $30,000.
Which has led to a massive spike in BTCUST (bitcoin not priced in dollars, but priced in the UST stablecoin). pic.twitter.com/Xn7qcy4VMZ
— Blockchain Backer (@BCBacker) May 10, 2022
Rumors of a full-blown Terra meltdown quickly spread on social media. Nonetheless, the company’s vocal co-founder, Do Kwon, remained quiet after announcing the bulk BTC liquidity injection.
Kwon retweeted a summary of the situation from Jose Macedo, founding partner at Delphi Ventures, who argued that Terra’s contingency measures would eventually lead to greater decentralization of the crypto industry’s largest USD decentralized stablecoin.
“Haters will criticize this for centralization and they are right for now. @LFG_Reserve has made $UST more robust but also temporarily more centralized,” he wrote on May 9th.
Data from on-chain monitoring resource BitInfoCharts, meanwhile, confirmed the movements, the wallet balance of Terra non-profit organization Luna Foundation Guard (LFG) rising from 70,000 BTC ($2.23 billion) to 0 BTC.
LFG recommended that not all previously owned BTC were sold, and promised to update the community.
$35,000 on the table
BTC/USD nonetheless managed to bounce back from its own collapse, trading near $32,000 at the time of writing on May 10.
Related: Pro traders take a hands-on approach as bitcoin price explores new lows
Some were even willing to “buy the dip”, including El Salvador with President Nayib Bukele to confirm the purchase of 500 BTC at an average price of $30,744.
“I don’t know how deeply markets will correct as an additional outlier on the LUNA UST peg is making its share of the decline,” said Cointelegraph contributor Michaël van de Poppe reacted over night.
“All I know is that the UST peg is a temporary shock and I expect we’ll be trading around $35,000 for bitcoin over the next 24-48 hours.”
The “shock” was still ongoing at the time of writing, with UST trading 8% below USD parity. Terra’s LUNA token traded at $32 after bleeding more than 50% of its value in 24 hours.
A Twitter poll Popular commentator Benjamin Cowen revealed that a majority of over 12,000 respondents believed the bond would eventually be restored.
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https://cointelegraph.com/news/kwontitative-easing-btc-price-hits-43k-in-ust-as-terra-empties-2-2b-bitcoin-bag “Kwontitative Easing” – BTC price hits $43K in UST as Terra empties $2.2B bitcoin pouch