Panic in the cryptocurrency market: Terra USD is no longer linked to the dollar

Cryptocurrency is now actively developing and being used in many different areas. One of the most successful and recognisable instruments is Terra USD. But recently there has been news that it has lost its peg to the dollar. And since then, the value of the stabelcoin has plummeted to 70 cents. The statistic says that the mark was 62 cents, but has since stabilised at 90 cents.

The creator of this koin is Singapore-based company Terraform Labs, and the product itself appeared in 2018. It is part of a larger blockchain project called Terra, and the idea is to monitor the state of the dollar.

It is also important to note the distinguishing feature, which is the absence of cash as well as other assets held in reserve.  And it uses a complex code mix of another token called LUNA to stabilise the value.

UST is extremely important for any bitcoin investor, because the company is sitting on billions of dollars exactly in the digital currency and at any moment they could appear on the market.

So every investor is keeping a close eye on the situation and forecasting the situation. After all, it is important to understand whether it will be possible to keep the peg to the dollar, because it is extremely important and everything comes with risks.

It is important to note that the founder of Terra bought bitcoin for a total of $3.5 billion to provide support during the crisis. In theory, the plan was to exchange bitcoin instead of LUNA, but this approach has not yet been used in practice and has not been tested at all.   

As of 10 May, the company’s main lending record has fallen by almost 4 billion and now exceeds 6.4 billion. This, of course, needs to be addressed, and at the very least a loan of $750 million will be provided. And all this in order to somehow be able to protect the peg to the dollar, and after that a similar amount will be allocated for bitcoin acquisition. But it all depends on the realisation of the market.

On top of that, it has been reported that the company has withdrawn about 37,000 bitcoins, totaling more than $1 billion. This amount has been allocated to provide credit facilities.  Of course, because of the uncertainty, there was indeed panic and a lack of awareness of how to act correctly and generally what to do.

It’s no secret that bitcoin is the biggest digital currency at the moment, but due to this situation, its value has dropped below $30,000, which is a record high since the middle of last year. And compared to its all-time high back in November, the value is down 50%.