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GreekReporter.comBusinessBitcoin and Ethereum Fall After TerraUSD Price Crash

Bitcoin and Ethereum Fall After TerraUSD Price Crash

TerraUSD cryptocurrency
Luna, the sister cryptocurrency of stablecoin TerraUSD, has collapsed to nearly $0.Credit: CryptoProfessor

Cryptocurrencies took a hammering on Thursday following the crash of Luna, the sister cryptocurrency of stablecoin TerraUSD, whose value tumbled dramatically on Wednesday.

The cryptocurrency Terra (Luna) has collapsed, losing more than 99 percent of its value. The coin’s value tumbled dramatically on Wednesday, falling from around $6.75 to just over $1. It fell further on Thursday and is valued at just $0.02 as of Thursday afternoon.

Bitcoin nosedived another 14 percent, changing hands at US$27,039, its lowest level since the end of 2020.

Ethereum, on the other hand, has lost nearly a quarter of its value in the last 24 hours and is down 23 percent to US$1,824, its lowest price since March of last year.

Tether, the world’s largest stablecoin, also fell below its $1 peg on Thursday amid a broader panic in cryptocurrency markets.

TerraUSD uses code to maintain its price at around $1

TerraUSD, or UST, has been dragged into the spotlight in the last few days after the so-called stablecoin, which is supposed to be pegged one-to-one with the U.S. dollar, fell sharply below the $1 mark.

UST is an algorithmic stablecoin that uses code to maintain its price at around $1 based on a complex system of minting and burning. A UST token is created by destroying some of the related cryptocurrency luna to maintain the dollar peg.

Unlike rival stablecoins Tether and USD Coin, UST is not backed by any real-world assets such as bonds. Instead, the Luna Foundation Guard, a nonprofit created by Terra’s founder Do Kwon, is holding about $3.5 billion of bitcoin in reserve.

RelatedDigital Dollar Becomes More “Urgent” After Crypto, Stablecoin Boom

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