Panic seemed to erupt in crypto markets overnight on May 11 when blockchain protocol Terra failed to stabilize its bleeding cryptoassets.
Data from Cointelegraph Markets Pro and TradingView showed that both proprietary token LUNA and stablecoin TerraUSD (UST) suffered renewed heavy losses on the day.
A dubious new “all-time high” for Bitcoin
UST lost its peg to the US dollar after a mass sale that some argued was “coordinated” to destroy the Terra ecosystem.
Attempts to shore up the peg with both LUNA and Bitcoin (BTC) reserves failed, and as uncertainty gripped the market, both UST and LUNA dove to levels unimaginable just days earlier.
Always close… stay strong, lunatics
— Do Kwon (@stablekwon) May 10, 2022
Co-founder Do Kwon said a “recovery plan” should be released, details sparse at the time of writing.
rumours Circulating online suggested that other major crypto firms may be willing to contribute funds to support the bond.
On May 11, UST was trading at just $0.27 after briefly falling to lows of $0.25, 75% below dollar parity.
LUNA/USD was at $6, down over 90% in May alone.
Another unintended consequence of the turmoil was BTC/UST hit a nonsensical level of nearly $140,000 on major exchange Binance, suspending LUNA and UST payouts on May 9th.
Bitcoin performs “remarkably well”
In response, it was a mixture of shock and nervousness about the market’s recovery that permeated analysts’ minds.
Related: Ethereum Rises Against Bitcoin Despite Crypto Market Calm – Will ETH/BTC Gain 50% By June?
Attention also focused on the largest USD stablecoin, Tether (USDT), as Tether’s Chief Technology Officer Paolo Ardoino seemed equally surprised by recent events.
— Paolo Ardoino (@paoloardoino) May 11, 2022
However, despite the potential selling pressure on Bitcoin itself, the largest cryptocurrency had avoided a fresh dip below $30,000 at the time of writing.
“I think bitcoin has held up remarkably well in the context of the Luna saga with its forced BTC sales. There remains a lot of uncertainty in the market, but for now, the $30,000 level for Bitcoin is broadly holding up well.” Philip Swift, creator of analytics platform LookIntoBitcoin, told Cointelegraph in private comments.
“We are seeing a number of metrics on LookIntoBitcoin showing BTC approaching major “value” levels where historically strong hands are accumulating bitcoin at value prices. There is also plenty of evidence that long-term holders are not concerned by this short-term volatility. “
BTC/USD, like other risky assets, faced another source of volatility on the day as US CPI data was due for release.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
https://cointelegraph.com/news/terra-rescue-plan-still-at-large-as-luna-falls-below-5-bitcoin-spikes-to-138k-in-ust Terra’s ‘bailout plan’ is still at large as LUNA falls below $5, Bitcoin surges to $138K in UST