UST Stable coin depegs from dollar USD may Crash BTC,cause crypto death spiral

[bbc.reporter]

Their products have some death points which they should realize at begining when they build it. What Terra did with UST and LUNA is partially similar to margin trading and liquidation on the market. Traders are not safe if the collateral asset is Bitcoin, altcoins because when price of collateral asset is down deeply, their position will be liquidated.

Now you can add stablecoin into bad asset list for collateral. I don't understand why Terra comes up with the idea, totally algorithm, smart contract based stable coin which is backed by other coins even they are Bitcoin or Ethereum

It might not only be that. Before we were very worried about USDT's peg if it can keep it versus USD then now we are presently looking at UST if it can recover and repeg to USDT which also is trying to keep its peg with USD hehehe. This is a comedy show being written in crypto history with algorithmic stablecoins pegging with fractionalized stablecoins that are pegged with a fractionalized fiat currency. The Big Short 2.0 in the making.

Also, it is speculated that a major liquidity provider in the cryptospace has lost much of its equity in UST and Luna. This might cause the whole market to dump lower. Follow the Luna wolf tattoo hehehee.


Galaxy

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[Ozero]

What happened to $ust and $LUNA shows that no matter the level of trust we have in any coin we should not go all in and always learn to take profit, the Fud and dumping really affected the whole crypto market entirely. Currently $ust is now at$0.63 from $0.21 I believe that ust will be back to it previous position, but luna going back to all time high will be a long journey awaiting to occur

I don’t see much point at all in creating a stablecoin that will be backed by a decentralized cryptocurrency and, like all cryptocurrencies, has a high degree of volatility. This undermines the credibility of other fiat-backed stablecoins and also poses an existential threat to other fiat-backed stablecoins.
If this continues, governments could ban the use of any stablecoins that use their fiat altogether. Moreover, their CBDCs will soon begin to appear en masse, which will compete to a certain extent with the current private and commercial stablecoins.
But the situation with UST and LUNA cannot seriously affect bitcoin, ethereum and other cryptocurrencies.

[hd49728]

It might not only be that. Before we were very worried about USDT's peg if it can keep it versus USD then now we are presently looking at UST if it can recover and repeg to USDT which also is trying to keep its peg with USD hehehe. This is a comedy show being written in crypto history with algorithmic stablecoins pegging with fractionalized stablecoins that are pegged with a fractionalized fiat currency. The Big Short 2.0 in the making.

I know how crypto market is with fud and everything will return to normal. However with this case, it is an attack and seriously it goes beyond anything we can imagine of. Unfortunately, in calculation it is impossible for LUNA to come back to even jusf $1. Anyway, I smell many things fishy in this case. Many ventures stay outside even they have serious huge capital there. Did they short it too? When short is done, will they suddenky appear to give financial support for Terra?

Also, it is speculated that a major liquidity provider in the cryptospace has lost much of its equity in UST and Luna. This might cause the whole market to dump lower. Follow the Luna wolf tattoo hehehee.


Galaxy

Nice tattooo!

It is another thing. If the incident is a huge combined attack not only on Terra but also aim at crypto market in general, months ahead will be bad.

[bbc.reporter]

It might not only be that. Before we were very worried about USDT's peg if it can keep it versus USD then now we are presently looking at UST if it can recover and repeg to USDT which also is trying to keep its peg with USD hehehe. This is a comedy show being written in crypto history with algorithmic stablecoins pegging with fractionalized stablecoins that are pegged with a fractionalized fiat currency. The Big Short 2.0 in the making.

I know how crypto market is with fud and everything will return to normal. However with this case, it is an attack and seriously it goes beyond anything we can imagine of. Unfortunately, in calculation it is impossible for LUNA to come back to even jusf $1. Anyway, I smell many things fishy in this case. Many ventures stay outside even they have serious huge capital there. Did they short it too? When short is done, will they suddenky appear to give financial support for Terra?

Also, it is speculated that a major liquidity provider in the cryptospace has lost much of its equity in UST and Luna. This might cause the whole market to dump lower. Follow the Luna wolf tattoo hehehee.


Galaxy

Nice tattooo!

It is another thing. If the incident is a huge combined attack not only on Terra but also aim at crypto market in general, months ahead will be bad.

It is speculated that there were insiders and investors of Luna themselves who were the first to know what was happening and withdrew all their UST from the Anchor protocol, dumped their UST for USDT or USDC in Curve and also went to short Luna. There are 2 cryptofunds that also are market makers who have the capability to have done it, 3 Arrows Capital and Alameda Research. They might have collected billions of dollars from this catastrophe.

Regulations on stablecoins might come much quicker than expected. Circle and USDC might be given the most benefit because of this and steal Tether and USDT's lead in the stablecoin market.



A top official at the U.S. Securities and Exchange Commission (SEC) signalled on Thursday that stricter rules around crypto stablecoins could be drawing closer.

Cryptocurrency markets have an overall value of about $1 trillion this week amid the collapse of the stablecoin TerraUSD and a destabilising plunge in Tether, currently the world's largest stablecoin by market cap.

Source https://www.reuters.com/business/finance/secs-hester-sees-movement-us-stablecoin-regulations-2022-05-12/



Also that arm with the tattoo is Mike Novogratz of Galaxy Digital hehehe.

[Baofeng]

^^ Oh, so this means that there is insider trading or this might be the plan of Do-Kwon months ago when he shares that he will start to buy billions worth of BTC and then this crash happens.

But I wouldn't say that it's a death spiral, only those strong altcoins survived the current downtrend. Bitcoin starting all over again and trying to regain back the $30k support levels.

[hd49728]

It is speculated that there were insiders and investors of Luna themselves who were the first to know what was happening and withdrew all their UST from the Anchor protocol, dumped their UST for USDT or USDC in Curve and also went to short Luna. There are 2 cryptofunds that also are market makers who have the capability to have done it, 3 Arrows Capital and Alameda Research. They might have collected billions of dollars from this catastrophe.

I don't believe that Do Kwon and his team will put themselves in trouble by doing this. I don't say anything as never can happen but even if Terra leaked it to insiders and if insiders (two crypto ventures you said) did short UST for profit, they are evil funds and should not be trusted. If they did it, they brought suicides to many investors, not only bankruptcy.

Regulations on stablecoins might come much quicker than expected. Circle and USDC might be given the most benefit because of this and steal Tether and USDT's lead in the stablecoin market.

I understand regulations must come and will become more strictly even without the UST LUNA catastrophe.

How LUNA can recover from it? Buy back and burn with support from exchanges and ventures? It will takes so much time, months maybe.

[StarKay]

The good thing about Bitcoin that most Altcoins lack is it's decentralisation, UST is not as decentralised as it looks initially. The crash of Luna and UST will definitely impact negatively how people view Cryptocurrency but it won't crash the price of BTC further.

[coolcoinz]

Also, it is speculated that a major liquidity provider in the cryptospace has lost much of its equity in UST and Luna. This might cause the whole market to dump lower. Follow the Luna wolf tattoo hehehee.

Bitcoin does not rely on Luna. There was completely no connection up until Luna team decided to boost people's confidence by buying BTC. Then they sold that BTC all at once in panic, proving that BTC was not to back the token. It was just there for show, to make people think that there is any backing. That's why there was such a panic among holders of Luna because they thought devs are running an exit scam. Bitcoin was doing great long before Luna was created and it will be doing so long after it's gone. Now that all BTC held by Luna devs was sold there's no possible way for Luna to impact bitcoin.

[24Kt]

Also, it is speculated that a major liquidity provider in the cryptospace has lost much of its equity in UST and Luna. This might cause the whole market to dump lower. Follow the Luna wolf tattoo hehehee.

Bitcoin does not rely on Luna. There was completely no connection up until Luna team decided to boost people's confidence by buying BTC. Then they sold that BTC all at once in panic, proving that BTC was not to back the token. It was just there for show, to make people think that there is any backing. That's why there was such a panic among holders of Luna because they thought devs are running an exit scam. Bitcoin was doing great long before Luna was created and it will be doing so long after it's gone. Now that all BTC held by Luna devs was sold there's no possible way for Luna to impact bitcoin.

Yes, better for them to get out of this market as they are just deceiving people. I also believe that they were holding BTC just for a show, to gain confidence from their holders. But now, we are seeing their true colors. Do Kwon said that he will rebuild their platform. I don't think they can, their investors already lost their trust to this team. Do you really think they will spend more on their projects? So yes, Luna has nothing to do with BTC market as we move forward. If they don't have BTC anymore, that's great. So they don't need to lure investors by their BTC holdings.

[Fortify]

We had news this weekend , Monday and Tuesday that the stable coins UST depegs from  dollar USD and  has collapsed and continue to plunge in price even Luna price is currently trading around ($9 - $11)  this morning as at the time of writing.
The UST stable coin is not really back by anything, so people do need to get out right away.

                     HOW MUCH WOULD THESE NEGATIVELY AFFECT BTC AND THE ENTIRE CRYPTO ?.

IN MY VIEW
Doing this may cause the crypto death spiral and it means that there will be a panic selling and could just collapse Bitcoin ,Ethereum, and the entire Crypto market and trillions of dollars life savings could be wiped out just in a moment and currently people are loosing money on crypto Twitter right now, companies have started selling millions of dollars of UST existing , exchanging their UST back into other pegged dollar USD coin and have lost thousands of dollars just in a single transaction conversation process and the spread wasn't just very good looking at exchange rate between UST to Dollar, they just exited that position for the fear of UST finally collapsing or having a free fall , So in a worst case scenario these companies  
like.
Jump capital, Luna foundation guard (LFG),
 Do kwon the founder of Terraform labs and others are going to be selling hundreds of millions of dollars worth of Ethereum to try to prop up this struggling Terra ecosystem and then they may also go into their Bitcoin reserves which some of have started doing already and may also be sold to prop up Terra.

Summary....
Therefore going further, If the UST peg cannot hold, then I think LFG will have to dump its bag of Bitcoin it loaded and this will cause more panic selling and cause Bitcoin to spiral down and further crashing down the price of Bitcoin and the entire cryptocurrency as well.

Please throw your own opinion on this as we have great panic right now.

Link for more details
https://www.coindesk.com/business/2022/05/09/ust-stablecoin-falls-below-dollar-peg-for-second-time-in-48-hours/

https://twitter.com/crypto/status/1524268467448389634?s=19

It just goes to show that even tokens like Tether which claim to be backed by dollar reserves are vulnerable to large shocks and ripple effects throughout the market. Like a row of dominos, it has shown that when one starts to fall they are all likely to fall and the panic affect can be overwhelming. You're much better off sticking with truly decentralized currencies like Bitcoin if you want to be part of this market, it has inherent volatility but is still a lot more stable and not tied together with the banking deposits held under centralized conditions which also rely on a large degree of trust in companies that can be unaudited for long periods of time.

[bbc.reporter]

^^ Oh, so this means that there is insider trading or this might be the plan of Do-Kwon months ago when he shares that he will start to buy billions worth of BTC and then this crash happens.

But I wouldn't say that it's a death spiral, only those strong altcoins survived the current downtrend. Bitcoin starting all over again and trying to regain back the $30k support levels.

Insider trading in the cryptospace is a certainty because it is easier to do with everything almost unregulated. Coinbase has accumulated and pumped coins with the knowledge that the coins will be listed. Binance and other exchanges are doing this also. This is the power of having your own trading desk without a regulator watching you.

Who said that this would create a death spiral? Do Kwon has dumped most of the bitcoin in Terra's treasury. There might only be 300 coins left in the wallet hehehe.

[dtpman83]

With just 80 million out of 3,9 billion from the reserve, UST can not be made whole. That is just 2 percent of the reserve for 99 percent of its users.

TFL, LFG and Do Kwon are lieing at every turn. They are scammers.  I highly believe they are still having the majority of the btc reserve or have sold it to themself. Selling 98 percent of the reserve to a handful of whales does not seem to be right/legal.

The best shot is to take legal actions against them to retrieve the bitcoin reserve or other funds they have syphoned over time. With that money the majority of UST holders could made whole.

Then Fatmans proposal on terra money would be the best shot. Basically everyone would get UST maginal tier based back in form of USDC, favoring smaller wallets. Example: The fist 5000 UST would get 90 percent back, the next 15000 UST would get 80 percent back, the next 25000 UST would get 70 back etc.
So some who holds 40000 UST would get back: 5000*0,9 + 15000*0,8*20000*0,7=30500 USDC.
Above is just an example not real numbers.

Exchanges would need to provide relevant data of how many users did hold how many coins at the prepeg date. Then users could exchange their UST to USDC. For users who had panic sold they would need to buy back the UST in order not to gain twice (compensation+selling)

What about luna holders: UST holders would in this proposal priotized, because UST was supposed a stablecoin and not a volatile assets. Luna is also a governance token from the legal perspective. However even UST holders are priotized, LUNA holders should be included and made also somehow partially whole. We should avoid that Do Kwon pits UST and Luna holders against each other. LUNA and UST holders have to unite against LFG, TFL and Do Kwon .


Another smaller shot is the possibility that big players will donate something. Binance CZ, Justin Tron and Vitalik Buterin have already twittered about Fatmans proposal to be the best way. The whole crypto reputation is at stake and if millions affected users are spreading the word, crypto will go down in the longterm, decreasing revenue or wealth for the big players or exchanges. It would be in their interest to help and also avoid lengthy and costly lawsuits.

Some links below:

Fatmans Proposal tier based USDC compensation for UST holders: ([Proposal] Tiered repayment: 1:1 USDC refund to all UST holders up to a certain cap per-wallet using LFG funds, favouring small wallets)
https://agora.terra.money/t/proposal-tiered-repayment-1-1-usdc-refund-to-all-ust-holders-up-to-a-certain-cap-per-wallet-using-lfg-funds-favouring-small-wallets/6471

Binance CEO CZ tweet about Fatmans proposal:
https://twitter.com/cz_binance/status/1526129841376043008

Justin Sun tweet regarding Fatmans proposal:
https://twitter.com/justinsuntron/status/1526149180909289472

Vitalik Buterin tweet regarding Fatmans proposal:
https://twitter.com/VitalikButerin/status/1525561624974700545

Other links:
Discord link to Fatman regading legal actions against LFG, TFL and Do Kwon
https://discord.gg/k3DPgn9ds6

Some legal background information:
https://agora.terra.money/t/next-steps-for-luna-ust-holders-a-detailed-analysis/22084

Fatmans twitter account:
https://twitter.com/FatManTerra

Please be always aware of scammer or impersonators. Fatman or other will never dm you first. All links i provided, you can recheck in the "Fatmans Proposal tier based USDC compensation for UST holders" link

[dtpman83]

If some hero or legendary members are reading that, it would be nice if you could share my post or spread the information by yourself.

Thanks

[PrivacyG]

Is it a sign of just how completely out of touch I am in this field that I never once heard about Terra, or UST, or any of the supposed implications on Bitcoin until yesterday? And that's only because of work -- someone sent me something to look at about Terra, and I had to look it up.

Late reply but no.  It is not a sign of how out of touch you are.  It is how quickly a coin comes and goes.  Unless you like and follow hype, you will likely miss it completely.  I follow markets on a daily basis and it happens to me every week that I wonder where the heck did a coin come from in the top 100's.

-
Regards,
PrivacyG

[Kakmakr]

The thing is..... This Stablecoin debacle has started a "trigger" event... because a lot of Stablecoin holders are now questioning the validity that their coins are backed by something... or if it is just backed by "promises"    

The funny thing is... Fiat is backed by government "promises" and that is acceptable by the broader public, but when a Stable coin is backed by "promises" ....people will make a big thing out of it.

The good thing is..... some people behind these coins have BTC reserves to pump the validity of these claims, when the shit hits the fan.  

[pooya87]

Doing this may cause the crypto death spiral and it means that there will be a panic selling and could just collapse Bitcoin

I hope this has given you (and other newbies like you) some very valuable experience that shitcoins dumping is never going to cause any major changes in bitcoin price since it is now 7 days later and bitcoin price is exactly where it was when the shitcoin called Luna first started dumping hard.
This is not the first time it happens either. There have been other big shitcoins, bigger than Luna, that got dumped hard and people thought bitcoin would follow. Not to mention that bitcoin price is not high because of some shitcoin! It is high because of real adoption, unlike the shitcoins themselves that exist because of bitcoin.

[buwaytress]

The thing is..... This Stablecoin debacle has started a "trigger" event... because a lot of Stablecoin holders are now questioning the validity that their coins are backed by something... or if it is just backed by "promises"    

All good things then. Stablecoin questions came for me even in my first year of learning about Bitcoin and crypto. From the days of Spoofy and people getting Bitfinex'd. And even when algorithmic coins came out, they all failed within months.

So... we've been constantly told and warned. But if it took a collapse of Terra's proportions to finally make people sit up and take notice, all the better.

But mark my words, the same guys going in for 20% APY are going to hungrily enter the next big promise. No lessons will be learnt.

The funny thing is... Fiat is backed by government "promises" and that is acceptable by the broader public, but when a Stable coin is backed by "promises" ....people will make a big thing out of it.

To be fair, the governments of various countries have bailed out investors numerous times, or have had other states bail them out. Which is more than you can say for crypto.

The good thing is..... some people behind these coins have BTC reserves to pump the validity of these claims, when the shit hits the fan.  

Didn't Terra have something like 3 billion dollars in Bitcoin reserves that didn't do shit to the fan-hitting shit?

[OcTradism]

I hope this has given you (and other newbies like you) some very valuable experience that shitcoins dumping is never going to cause any major changes in bitcoin price since it is now 7 days later and bitcoin price is exactly where it was when the shitcoin called Luna first started dumping hard.
This is not the first time it happens either. There have been other big shitcoins, bigger than Luna, that got dumped hard and people thought bitcoin would follow. Not to mention that bitcoin price is not high because of some shitcoin! It is high because of real adoption, unlike the shitcoins themselves that exist because of bitcoin.

I don't think it is correct to call what happened with $LUNA is dumping. That token was crashed to the hell, not only dumping, not normal dumping.

Shitcoins follow Bitcoin but Bitcoin does not follow them. Shitcoins die with time, Bitcoin does not. Coinmarketcap has Historical snapshots.

Most of shitcoins from 2013 now die.

[DaveF]

And it looks like someone is going to have some legal issues very soon:

https://www.theblockcrypto.com/post/147606/south-korea-investigates-financial-crimes-crypto-terra-luna-kwon-crash

Shocking.....wait no it's not. As I said reading it anyone could see it was a scam from the start.
You can't give 20% rates anyone who thinks differently can't do math.

-Dave

[bbc.reporter]

Similar to what Boafeng speculated on insider trading, which should in reality not be a speculation, this news article shows that there were insiders who might be the first to receive the news on what was happening behind Luna and UST. Joey Krug might be saying that the market has been frothy, however, they might have been one of the first to be informed that Do Kwon was moving bitcoin from Terra's treasury to the exchange to defend the peg.

Also, Pantera's node and other insiders' nodes became offline during the depegging



Pantera Capital, one of the high-profile backers of Terraform Labs, cashed out nearly 80% of its Terra (LUNA) investment well before TerraUSD (UST) collapsed last week.

"The market has been fairly frothy over the last year and thus we'd exited the majority of our position before any of this happened," Joey Krug, co-chief investment officer at Pantera Capital, told The Block. "Roughly 80% over the last year, fairly gradually over time."

Source https://www.theblockcrypto.com/post/147668/terra-pantera-capital-cashed-out-80-investment-before-ust-crash