Moon cryptocurrency plummets to $ 0 as UST falls off the peg; bitcoin increases

Bitcoin staged a rebound on Friday, surpassing $ 30,000 despite continuing problems with the TerraUSD stablecoin which caused panic in the cryptocurrency market.

The world’s largest cryptocurrency bitcoin was trading at around $ 30,262.85 at 4 a.m. ET on Friday, according to data from CoinGecko, up 8% in the past 24 hours after falling to unprecedented levels. from the end of 2020 to the beginning of this week.

However, the digital currency is still down 16% over the past seven days.

The recent collapse of cryptocurrencies, which has seen billions of dollars wiped out of the marketwas largely triggered by the collapse of a controversial stablecoin known as TerraUSD or UST, which should be pegged one to one with the US dollar.

UST lost its peg, however, and was trading at around 14 cents on Friday, according to data from CoinGecko.

moona token closely associated with UST, is now worth $ 0 as a result.

FSO and the moon are connected. UST is dubbed an algorithmic stablecoin, which means its $ 1 peg should be governed by the underlying code. This is fundamentally different from other stablecoins like bind Other USDC which are backed by real world assets such as bonds. FSO has no real-world reservations.

The UST algorithm works through a complex system of minting and burning of tokens to maintain price stability. A UST token is created by destroying some of the related cryptocurrencies to keep the dollar peg.

But extreme market volatility put UST to the test and it was unable to hold anchor.

Adding to further complications is the fact that the Terra blockchain that underpins UST and luna stopped processing transactions twice in less than 24 hours.

In addition to the UST saga, cryptocurrency markets have been hit by a number of other headwinds, including higher ones. inflation and interest rate hikes which caused a sell in global equity markets which is filtered. The price movements of cryptocurrencies have been correlated with the stock markets.

“The Moon / UST situation has hit market confidence quite severely. Overall, most cryptocurrencies are down. [more than] 50% Combining this with global inflation and growth fears does not bode well for cryptocurrencies in general, “said Vijay Ayyar, vice president of corporate and international development at cryptocurrency exchange Luno.

Bitcoin’s big rebound may also not be sustainable.

“In such markets, it is common to see rebounds of 10-30%. These are normally bear market rebounds, which test previous support levels as resistance,” Ayyar said.