UST Resumes Spiral After Quiet Day Orbiting 90 Cents
Terra’s shaky stablecoin is prompting calls for closer regulation by key U.S. officials.
TerraUSD (UST) resumed its downward spiral Tuesday afternoon New York time, sinking below 80 cents as it breached a relatively quiet 12-hour period when its price remained stable around 10% off its dollar peg.
- Terra’s shaky stablecoin has struggled to maintain its $1 target since this weekend’s dips began; it reached as low as 68 cents Monday in a swan dive that prompted billion-dollar rescue efforts from reserve overseer, the Luna Foundation Guard.
- Crypto market participants, regulators and critics are keenly watching UST’s flailing to measure up to the concept of algorithmic stablecoins, which rely on programs (over full collateral) to stay at $1 a coin.
- “I think that simply illustrates that this is a rapidly growing product, and that there are risks to financial stability and we need a framework that's appropriate," Treasury Secretary Janet Yellen said of UST at a U.S. Senate hearing Tuesday.
- Sinking to 78 cents and lower late Tuesday, UST ruptured the day’s staid trading session amid reports by The Block that LFG was searching for a $1 billion bailout. Firms reportedly involved in the talks did not immediately respond to CoinDesk.
- LUNA, the token meant to act as a backstop to UST's price, lost 63% of its value over the past 24 hours, plunging from $44.18 to less than $16 at press time. The token traded hands above $86 less than a week ago.
UPDATE (May 10, 2022, 22:28 UTC): Adds context on LUNA's price.
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