Crypto News: UST Peg Has Broken | The Complete Timeline
s dollar crypto markets are crashing, fear is in the air and theres no telling how low it can go. How did this happen? Was it a coordinated attack? What happens next for ust and crypto all this and more coming up on this edition of crypto news Music in the last 24 hours, crypto markets have dumped with all of the major currencies going down 10 or more mainstream media outlets like cnbc, are throwing around all Kinds of crazy ideas as to why this is happening, but in order to find out why all we have to do is look at us terra, the stable coin of the terra luna ecosystem, starting around may 7th at 4 pm european standard time, tara lost its peg Since then, its been struggling to get back to its peg and, most recently its broken down much much lower terra is a massive stable coin in the crypto ecosystem, with a market cap of almost 20 billion dollars at its peak u.s terrace para token, luna is also A major player in the cryptocurrency space and had a market cap of 30 billion dollars before all of this happened. If the value of usc cannot go back to one dollar its possible that both of these market caps are going to zero or very close to zero, the effects of a complete d peg would be felt across all cryptocurrencies and fears about. This are the reason why all crypto is crashing right now in this video im going to take you through a step by step timeline of what actually happened.
Show you the evidence for why this could have been a coordinated attack on terra and give my thoughts on what could happen next for us terra and the crypto ecosystem as a whole. All of this started when two very large transactions were made selling ust on the open market. One of these transactions was a sale of 84 million dollars worth of ust into curve, which is a stablecoin trading platform and the other was a 100 million plus dollar sale of ust on binance. This happened just minutes. After 150 million dollars of usc liquidity was removed from the curve pool the more liquidity in the curve pool the less that the price of usc would be affected by sales like this. So it seems like this was timed in order to take advantage of the lower amount of liquidity. While there are some conspiracy theories that luna itself could have been behind, these moves. Do kwan whos the founder of luna quickly clarified what actually happened. They removed the 150 million dollars in liquidity from curve in order to get that into a new pool next week. So we still dont know who dumped all the usc but its very possible that this person did it to try and break the peg on purpose. In order to profit from it, possibly from a short position somewhere else, the fact that they dumped this ufc on the market right after the liquidity was removed from the curve pool, makes this extremely likely.
In my opinion, we can see very clearly when the peg started to break on the ust chart and immediately after this happened, investors started pulling their money out of ust scared that the peg could break further one place we can see that is on anchor protocol. Just before this happened, there were over 14 billion dollars in anchor protocols deposit for their earned product. Now there are only 8.5 billion dollars left. This means that three and a half billion dollars have been pulled out of anchor so far and its very likely that this usc pulled out of anchor was converted into other stable coins, adding further downward pressure to the ust price. There was an interesting tweet thread that did an analysis of the addresses that pulled their money out of anchor and how much money on average they were actually pulling out. But the vast majority of the addresses that pulled their money out of anchor were whales. Moving more than one million dollars, over 75 percent of volume came from one percent of those wallets. The author of this twitter thread is printing, that as a good thing as if retail investors arent scared. But in my opinion, i think the retail investors are just slower than these whales and they have the ability to crash the price of eoc further, once the fear permeates them. So after that initial peg breaking the peg was bouncing around between half a cent down and back up to normal theres.
A lot of speculation that jump capital, which is a big crypto vc, with major terra bags, with selling ethereum on the market and using that to buy ust in order to pump up the price. But the peg was still not being maintained. So in comes the luna foundation guard with the tweet. The luna foundation guard is an organization in charge with protecting the peg of u.s terra on may 5th. They had over 3 billion worth of bitcoin, but since then the price of bitcoin has been crashing and theyve been using bitcoin to stabilize the price as they lay out in this tweet. The core of this tweet thread is where they say that theyre going to loan 750 million dollars to a trading firm in order to protect the ust peg. Basically, this means theyre going to sell 750 million dollars worth of bitcoin to buy usc to try and hold the peg. They masked that simple message and this weird tweet thread that caused a lot of confusion and makes me feel like they didnt want people to know that theyre actually selling their bitcoin, because it looks pretty bad when they bought their bitcoin not too long ago. For a much higher price than theyre selling it now as far as how they were actually going to maintain the price of ust, we got more information in the reply to a tweet by dokwan whos, the founder of tara luna. In this reply he says that if ust is within 50 bips, which means half a cent, then its pegged and they dont have to do anything, then they will deploy capital, aka, sell bitcoin and buy ust when they get outside of that range.
This explains why, for a long time, the price of ust was hanging around half a cent under one dollar, because every time it dipped below that, because every time it did below that lfg would buy more ust with their bitcoin. That was until the price dropped. Even more after breaking below that half a cent range, it dropped rapidly down to 98 cents on the dollar, again the price stabilized around 98 cents, which tells me that there was more capital being deployed to stem the bleeding. At that point it seemed to work for a while, but then the price broke again below 98 cents and went all the way down to around 95 cents at 95 cents, dokon tweeted again deploying more capital, steady leds. At the same time as this tweet 42 000 bitcoin were pulled out of the lfg reserves, which totals around 1.3 billion dollars its likely that theyre going to use this money to try and stem the bleeding. This tells me that they had burned through that 750 million dollars they initially allotted to maintain the peg and now theyre going to use this 1.3 billion dollars to try and protect it even more. At the time of recording this video, the price of ust has been hanging around 95 cents, but occasionally has been breaking lower willing to be scooped back up to that 95 cent level. Meanwhile, money is continuing to flow out of anchor protocol and just in the time where ive been recording, this video around 300 million dollars has flown out.
There really is a battle going on right now to maintain the peg, but to me i dont understand why anyone would want a significant portion of their net worth in ust. The ust peg is supposed to be maintained on its own by the algorithms that underpin luna and terra. The fact that these algorithmic mechanisms, plus billions of dollars being deployed by centralized organizations, cannot get the peg back to one dollar is extremely concerning, and it seems like. The clock is ticking as to when these organizations will run out of the money that they have to protect the pig. Unfortunately, bitcoin and ethereum are some of the cryptocurrencies are being sold to protect ust, and this whole fiasco is dragging the entire crypto market down. A lot of people seem to be confident that the peg will return to normal levels soon and the system is just working itself out. But if these funds run out of money and the peg breaks lower theres, no telling how low it could go in the contagion that follows, even if the chances are small usc going to zero, is a possible outcome. It sucks to make a video thats all about doom and gloom, but all i can say is that if it does go to zero thats a great time to buy more stable, cryptocurrencies like ethereum, if you have any questions, leave them in the comments below and ill.