- In addition to the well-known reasons for the continued strength of the US dollar and the simultaneous weakness of the US technology index Nasdaq meanwhile, uncertainties about liquidity in the Earth ecosystem (LUNA) are boiling rumors.
- Several factors caused the TerraUSD (UST) domestic stablecoin to temporarily release over the weekend. TerraUSD has been losing its peg to the US dollar for several hours.
- According to various tweets, there has been a concerted sales cascade of the UST stablecoin.
- Users Mudi Gupta And Life in DeFi describe the start of the FSO sell-off as a coordinated attack on the Earth ecosystem.
- As a result, US $ 84 million worth of TerraUSD was dumped on the market to spark panic among Luna’s investors.
- Although UST managed to recover shortly after the sell attempt and regain its peg to the US dollar, the interim devaluation has led to a massive drop in the price of Terra (LUNA) to $ 59.80 currently.
- The ninth largest cryptocurrency is trading a whopping 25 percentage points below its closing price on Friday 6 May.
Terra Labs countermeasures provide stabilization
- In order to stabilize the Earth ecosystem and slow the ongoing sales of the past few days, the Moon Foundation Guard (LFG) according to their own claims Bitcoin and TerraUSD totaling $ 1.5 billion to an unknown market maker.
- Despite this stabilization measure, some users of the crypto community fear that LFG may also part ways with its recently accumulated Bitcoin holdings.
- Several investors have attributed the drop in Bitcoin’s price over the past three trading days to the sell-off of TerraUSD and Luna.
- According to Terraform Labs founder Do Kwon However, Bitcoins with a value of US $ 750 million were only lent to restore the liquidity and thus the safety of TerraUSD.
- The fact that the UST price was able to quickly climb back to USD 1 underlines the resilience of the Earth ecosystem.
Complex problems in the financial market as a reason for the sell-off
- Although uncertainty about the lack of resilience in the Earth ecosystem may have increased Bitcoin’s sell-off, this factor is just one of many potential reasons for the cryptocurrency’s current weakness.
- Rather, it currently appears to be a mixture of political, economic and consequential uncertainties among investors, which is primarily responsible for the widespread sell-off in global financial markets.
- As long as investors remain on the sidelines and no bullish movement is initiated from the bullish field, investors should keep their feet steady for now.
- From the current point of view, a relapse to the lows of summer 2021 seems increasingly likely. In the coming trading days it should be clear whether Bitcoin can stabilize around the psychologically important mark of 30,000 USD.
- However, as the summer months on the classic financial market are statistically weak trading months, a widening of the correction towards USD 26,000 or even USD 20,000 cannot be ruled out.
Disclaimer: The price estimates presented on this page are not recommendations to buy or sell, but only an analyst’s assessment.
USD / EUR exchange rate at the time of going to press: EUR 0.95.
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