{"id":13613,"date":"2022-05-13T09:15:01","date_gmt":"2022-05-13T09:15:01","guid":{"rendered":"https:\/\/harchi90.com\/cryptocurrency-luna-crashes-to-0-as-ust-falls-from-peg-bitcoin-rises\/"},"modified":"2022-05-13T09:15:01","modified_gmt":"2022-05-13T09:15:01","slug":"cryptocurrency-luna-crashes-to-0-as-ust-falls-from-peg-bitcoin-rises","status":"publish","type":"post","link":"https:\/\/harchi90.com\/cryptocurrency-luna-crashes-to-0-as-ust-falls-from-peg-bitcoin-rises\/","title":{"rendered":"Cryptocurrency luna crashes to $ 0 as UST falls from peg; bitcoin rises"},"content":{"rendered":"
Bitcoin staged a rebound on Friday, jumping above $ 30,000 despite the ongoing woes of stablecoin TerraUSD which has caused panic in the crypto market.<\/p>\n
The world’s largest cryptocurrency bitcoin was trading at around $ 30,262.85 at 4 am ET on Friday, according to CoinGecko data, up 8% in the last 24 hours after it dropped to levels not seen since late 2020 earlier this week.<\/p>\n
However, the digital currency is still down 16% in the last seven days.<\/p>\n
The recent crypto meltdown, which has seen billions of dollars wiped off the market, has in large part been sparked by the crash of a controversial stablecoin known as TerraUSD or UST, which is supposed to be pegged one-to-one with the US dollar .<\/p>\n
UST has however lost its peg and on Friday was trading at around 14 cents, according to data from CoinGecko.<\/p>\n
Luna, a token closely associated with UST, is now worth $ 0 as a result.<\/p>\n<\/div>\n
FSO and luna are linked. UST is dubbed an algorithmic stablecoin meaning its $ 1 peg is supposed to be governed by underlying code. That is fundamentally different to other stablecoins like tether and USDC which are backed by real-world assets such as bonds. UST has no real-world reserves.<\/p>\n
The UST algorithm works through a complex system of minting and burning tokens to maintain price stability. A UST token is created by destroying some of the related cryptocurrency luna to maintain the dollar peg.<\/p>\n
But the extreme market volatility has put UST to the test and it has been unable to maintain the peg.<\/p>\n
Adding further complications is the fact that the Terra blockchain which underpins UST and luna stopped processing transactions twice in the less than 24 hours.<\/p>\n
On top of the UST saga, crypto markets have been hit by a number of other headwinds including higher inflation and interest rate hikes that have caused a sell-off in global stock markets which has filtered through. The price movements of cryptocurrencies have been correlated to stock markets.<\/p>\n
“The Luna \/ UST situation has hit market confidence quite badly. Overall most cryptocurrencies are down [more than] 50%. Combining this with global inflation and growth fears, does not bode well in general for crypto, “said Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno.<\/p>\n
Even the big bitcoin rebound may not be sustainable.<\/p>\n
“In such markets, its normal to see bounces amounting to 10-30%. These are normally bear market bounces, testing previous support levels as resistance,” Ayyar said.<\/p>\n<\/div>\n<\/div>\n
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Bitcoin staged a rebound on Friday, jumping above $ 30,000 despite the ongoing woes of stablecoin TerraUSD which has caused panic in the crypto market. The world’s largest cryptocurrency bitcoin was trading at around $ 30,262.85 at 4 am ET on Friday, according to CoinGecko data, up 8% in the last 24 hours after it …<\/p>\n