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

[Franctoshi]

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

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[mk4]

You're pretty late as the selloff of LFG's bitcoin holdings has started since yesterday; their public BTC address is already out of BTC (moved to exchanges already). The question is just that have they already sold every single BTC holdings or not.

[Franctoshi]

You're pretty late as the selloff of LFG's bitcoin holdings has started since yesterday; their public BTC address is already out of BTC (moved to exchanges already). The question is just that have they already sold every single BTC holdings or not.

This is very important question to ask and something we should know at the moment on what the Luna foundation guard (LFG) is actually doing at the moment with there Bitcoin reserves. Because most investors with bags of Luna are currently stucked with confusion at what alternative option or steps to take in order to protect their Funds at this very critical point in time.

[buwaytress]

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.

I've seen a lot in my time but 20% APY? That should have raised a lot of red flags. But well, this is crypto, isn't it?

[mk4]

This is very important question to ask and something we should know at the moment on what the Luna foundation guard (LFG) is actually doing at the moment with there Bitcoin reserves. Because most investors with bags of Luna are currently stucked with confusion at what alternative option or steps to take in order to protect their Funds at this very critical point in time.

Nada. LUNA holders took a risk on a project that's highly highly likely to implode (it just did), and now they face the consequences. TerraForm Labs would have to raise a HUGE amount of money to be able to bring back the peg, and I don't think VCs would risk their capital on a project that's highly likely to be dead.

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.

I've seen a lot in my time but 20% APY? That should have raised a lot of red flags. But well, this is crypto, isn't it?

If you want to know what happened:

UST is an algorithmic stablecoin a.k.a. backed by the LUNA token. Hence it's pretty much almost backed by thin air; hence why Luna Foundation Guard had to purchase a good amount of bitcoin to protect the peg if it's the case that there's a bank run.

And yea, it happened:

Peg broke due to UST having a huge bank run, with people selling the UST for other stablecoins (hence pushing down the price of UST). Now for the peg to be restored to $1, Luna Foundation Guard had to liquidate a crap ton of bitcoin on their reserves just to push UST back to $1, further pushing down the downward pressure on BTC.

[o_e_l_e_o]

Another day, another shitcoin collapses. Just happens to be a more popular one this time. Isn't the first and definitely won't be the last.

Bitcoin doesn't care. Yeah, there will be some short term implications on the price, but another shitcoin collapsing makes absolutely no difference whatsoever to how bitcoin continues to run, continues to have 100% uptime, continues to be decentralized, continues to be developed, and continues to grow. It obviously isn't going to cause a "death spiral", and in fact the more shitcoins which collapse then the better long-term for both bitcoin and the crypto space as a whole.

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?

No. It is a sign that you are not a moron chasing impossible promises with worthless shitcoins.

[DapanasFruit]

What is happening with LUNA is a big check of reality for the whole cryptocurrency industry. One thing for sure is that when a stablecoin turns out to be otherwise then it would be good to fully scrutinize the things backing the stablecoin, in the first place. This shows that a stablecoin pegged on top fiat money can be the way to go for the time being. Sadly, this development is affecting Bitcoin and is the major reason for its price spiral...all because BTC is utilized as a back-up value for UST.

[hugeblack]

I don't see what happened except that it is price manipulation, TERRA tried to make a quick profit by creating a stable currency, buying several thousand bitcoins and thinking that things will go well, there will be enough liquidity and then they will not need to be tied at a 1:1 ratio to keep the currency growing (exactly As happened with USDT), but things did not go well.

With the days, more details will become clear whether this is as manipulation or a breakdown in their stability algorithm.

Overall, I chose to take the risk and bought 250 UST for $100 .

[buwaytress]

@mk4 yeah I spent now about 10 minutes trying to understand Terra -- so it's actually a shitcoin and a stableshitcoin backed not even by shit. And this is just Bitcoin losing <30%. Imagine if it's broken and chased sub 30s. Fantastic how people can't see this coming.

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?

No. It is a sign that you are not a moron chasing impossible promises with worthless shitcoins.

Yeah, all them people trying to convince me to look at some marvellous algorithmic coin gone quiet, making me feel better and better about my failure to capitalise on them shitcoins a year ago. 22 cents now I'm seeing on Twitter for their "stablecoin" oo-ee.

[tranthidung]

We know stable coins can be minted from thin air. Even USDT, we don't know how they actually back all their USDT with USD and other assets. In the past, there was drama about USDT too. You can verify it on the USDT price chart. There were times that stable coin has its value down to around $0.9.

UST probably used wrong algorithm and they are centralized pegged with LUNA. Bitcoin and Ethereum can not save them. I hope LUNA and UST will recover but who knows.

PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets

[Ale88]

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.

I'm not sure if you just woke up but it's already been says since UST lost the peg, and I totally understand that it's a huge problem Luna since it's probably gonna die, but dragging down BTC, that's a totally different story. BTC is not gonna die because of UST/Luna.

[GreatArkansas]

I am also curious if they didn't buy any BTC this will happen.
But it seems like other people already noticed that there is a hole in this algorithmic-based Stablecoins Terra USD. And I also saw that some people telling it was first started at WAVES and then they did it next to UST stable coin.
But it seems even UST didn't suffer, the recent dump is still expected, it just happened.

[bittraffic]

I'm not sure if the rumors are true but I saw a thread about this which they are saying this as pure market manipulation.
The link is from

Code:

https://boards.4channel.org/biz/thread/48625257

I'm going to quote it because reading the text from there is very much hard, it will be easier if I separate the paragraphs.

Blackrock and Citadel borrowed 100K BTC from Gemini (it appears in their loan book). They swapped 25K of that BTC into UST; this was all done quietly in anticipation of the attack.

When the time was right, they called up Do Kwon at Terra Foundation and said they wanted to sell a lot of BTC for UST. As it was a large trade they told him they didn't want to move the market and asked if he would like to buy their large block of BTC at a discount for UST. Do Kwan took the bait. He gave them a huge chunk of UST, thus lowering the UST liquidity significantly.

At that point, Blackrock/Citadel dumped all of the BTC and UST causing massive slippage and triggering a cascade of forced selling in both assets. The real problem was Blackrock/Citadel knew that Anchor, which holds a lot of LUNA , was a Ponzi scheme (they offer 20% staking APY for Christsake) and this crash would trigger more withdrawals than Anchor can repay. These forced withdrawals and selling would trigger a massive selloff in Luna, thus further breaking the $1 peg and wrecking the market further.

Blackrock and Citadel can now buy the BTC back cheaply to repay the loan and pocket the difference. Meanwhile, billions of longs and Bitcoin VaR were wiped out. This was pure market manipulation.

Anyway, do you think its a good buy for Luna as it now dips below $3? Unbelievable dip really so I'm doubtful whether they could recover.

[Rikafip]

I'm not sure if the rumors are true but I saw a thread about this which they are saying this as pure market manipulation.
The link is from

Code:

https://boards.4channel.org/biz/thread/48625257

I'm going to quote it because reading the text from there is very much hard, it will be easier if I separate the paragraphs.

Saw that speculation as well, not sure what to think of it while the most plausible one I found so far is this one. Either way, it was definitely a market manipulation and someone made a lot of money off it.

Anyway, do you think its a good buy for Luna as it now dips below $3? Unbelievable dip really so I'm doubtful whether they could recover.

Its a pure gamble right now and I personally don't wanna touch that shitcoin at all, even though chances are decent that it will eventually make some pullback or at least dead cat bounce before it goes below $1 once again. Terra priority right now is their stablecoin and to do that they have to screw LUNA.

[DaveF]

I'm not sure if the rumors are true but I saw a thread about this which they are saying this as pure market manipulation.
The link is from

Code:

https://boards.4channel.org/biz/thread/48625257

I'm going to quote it because reading the text from there is very much hard, it will be easier if I separate the paragraphs.

Saw that speculation as well, not sure what to think of it while the most plausible one I found so far is this one. Either way, it was definitely a market manipulation and someone made a lot of money off it.

Or, it was all just a scam from the start and in the end it really was nothing but another scamcoin P&D just executed with a bit more finesse.
We only know what we can see, we don't know what we don't know. So this could have easily all been a setup from the early days just waiting for everything to fall into place.

-Dave

[Rikafip]

Or, it was all just a scam from the start and in the end it really was nothing but another scamcoin P&D just executed with a bit more finesse.
We only know what we can see, we don't know what we don't know. So this could have easily all been a setup from the early days just waiting for everything to fall into place.

That's certainly one of the possibilities, that Do Kwon played the long con and that this is nothing but a rug pull disguised as an attack. It certainly wouldn't be the first time we see something like that. Speaking of Do Kwon, just saw an interesting article about his (alleged) previous involvement in another failed algorithmic stablecoin, Basis Cash.

Do Kwon, the CEO of Terra creator Terraform Labs, was one of the pseudonymous co-founders behind the failed algorithmic stablecoin Basis Cash, CoinDesk has learned.
Basis Cash (BAC) was a closely watched revival in decentralized finance (DeFi) circles when it launched on Ethereum in late 2020, just before the launch of terraUSD (UST), Terra’s flagship stablecoin. Like UST, BAC sought to maintain a $1 peg through code, not collateral.
But it failed: The token of this long-abandoned project never achieved its target of dollar parity, sank below $1 in early 2021 and was trading well below 1 cent on Wednesday. Now history appears to be repeating: Over the last three days, UST sank precipitously below its peg, going as low as 27 cents in early morning U.S. hours Wednesday.

[stompix]

You're pretty late as the selloff of LFG's bitcoin holdings has started since yesterday; their public BTC address is already out of BTC (moved to exchanges already). The question is just that have they already sold every single BTC holdings or not.

Or, if we go full tinfoil hat..
Were those coins actually bought by them with real money and they were owned by them in the first place?
Or were those coins borrowed for this purpose alone, that would have been paid with money from future sales?

The other interesting part is, will there be any consequences for all the money lost, any investigations, or, the whole crypto world is just an add-on of the old system where you can run banks and companies into the ground, lose billions of people's money and not face any consequences? Cause for me it's starting to overlap dangerously close.

Because most investors with bags of Luna are currently stucked with confusion at what alternative option or steps to take in order to protect their Funds at this very critical point in time.

You can't protect anything and there is no way to protect something like this.

Some don't understand the fact that all those money that was used to buy Luna or Terra or whatever the shitcoin was called it's not invested there, it's in the pockets of the ones who sold it, so in order to recoup losses, you will need more money for some new investors.

Imagine you buy a house and the market crashes, the house is still there, you have paid 100k for it but now nobody is willing to give you're than 50k. The 100k you have paid has been already spent by the previous owner on hookers and drugs in the Bahamas so you will need a fairy to give you 100k, otherwise, it's 50k. Same for Luna, they need now somebody to pay 60 or 100$ per coin, fresh money from outside to recoup it, where is this money going to come from and why would anyone do it?



 

[Leo]

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

[Dunamisx]

Luna price is currently trading around ($9 - $11) 

one thing that is common with most of the altcoins is that their volatility is very high in terms of rising and falling, they are unpredictable when it comes to the price moving upwards, they can be very fast to appreciate and as well within the shortest time dropped and loose value, in the case of Luna here, it has the worst record of loses as it's ranked the highest  and top loosing coin (highest looser) while bitcoin only maintain a drop in price in a steady and gradual process unlike the massive fall of the altcoins.

there will be a panic selling and could just collapse Bitcoin ,Ethereum, and the entire Crypto market

Bitcoin is exceptional in this regards, why the panic on bitcoin since it's the major determinant of other cryptocurrencies moves and fate, despite the fall in the crypto market, bitcoin remain the most valuable coin and can not fall the rate others are, and for the investor on bitcoin, i think this is the best time for them to hold while the intending investors should take this opportunity to invest in bitcoin as this time is the opening for a launch on bitcoin investment and not shitcoins.

[fiulpro]

You're pretty late as the selloff of LFG's bitcoin holdings has started since yesterday; their public BTC address is already out of BTC (moved to exchanges already). The question is just that have they already sold every single BTC holdings or not.

If someone sells, it does not put the whole crypto economy into a death spiral rather it would create instability for a while considering the situation but we can also buy more, hold. The reason they might be doing could be tbe new rates of FED  interest but at the end there are many others who might try and get into the market, besides Luna went 35% down which is shocking while BTC is still holding on and we are not seeing extreme drastic changes. It's always a balance and I do believe all we need at the moment is 'patience' and if you sell your coins in a hurry you might miss a lot.