The INSANE Collapse of Terra Luna (Why Bitcoin & Crypto Are Crashing)
in todays video. I want to explain exactly why this is happening. What this means, if youre a crypto investor and just to be real with you, like weve, been covering for the last almost week now this collapse of tara luna and their algorithmic stablecoin like right here, is whats driving all this uncertainty in the market. Right now, taras usd ust algorithm stablecoin is sitting at still 64 cents on the dollar, its supposed to be stable, its supposed to be pegged to a dollar and heres the issue, just as a little recap heres why its tanking ust is backed by a reserve of Bitcoin, which is going down and terra luna, which is collapsing at the moment as well, so if your stable coin is going down and the reserves that back your stable coin are also going down, youre gon na have to sell those reserves to prop up your stable Coin, keep the peg, but then that the fear is that creates sort of a spiral of bitcoin being sold, luna being sold and if you still cant keep the peg. It sort of just adds on to this death spiral, so thats why crypto is crashing and if that still sounds a little confusing stick with me. Watch the whole video lets dig a little deeper. As of this morning, taras luna drops almost one dollar. After a 90 weekly plunge selling pressure on luna came as its apparent foundation issued 46 million tokens in the last day to help maintain usts one to one peg with the us dollar, so tara, luna and lfg.
The luna foundation guard is actively selling bitcoin, as well as luna to try and regain that peg to their stable coin. Thats public knowledge do quan made that very clear a few days ago and like we covered when this news came out, the luna foundation guard is not trying to exit its bitcoin position, but every time ust falls below their peg. They sell bitcoin, they sell luna to buy ust to help maintain that peg and then theyll also subsequently buy bitcoin buy the luna back if the price goes above, the peg, which has sort of been a non issue this last almost week, give me your thoughts on Any of this down below, i really would love to hear your take. Lets all check the comment section now and next up breaking news. As of this morning, usts dokuan lunas dokuan was behind an earlier failed stablecoin basis. Cash. I guess was the name: an algorithmic stablecoin project, founded by an anonymous rick and morty in 2020, was actually the work of dokwan, as well as other terraform labs employees wow, and we only know this because an ex terror colleague stated this information made it public and Then other xterra colleagues confirmed this info on dokwan so basis. Cash back was a closely watched revival in decentralized finance circles when it launched on ethereum in late 2020, like ust back sought to maintain a one dollar peg through code, not collateral. So it was an algorithmic stable coin, but it failed the token of this long abandoned project never achieved its target of dollar parity.
It sank below a dollar in early 2021 and was currently trading well below one cent on wednesday. Now history appears to be repeating: over the last three days, ust sank: precipitously below its bag, going as low as 27 cents in early morning, u.s hours, wednesday and again. Why are we just learning this information on dokuan today? Well hung suck king, a former engineer at terraform labs said basis. Cash was in fact a side project of some of taras early creators, including himself and dokwan in a direct quote from this engineer basis. Cash wasnt tested at the moment, and we werent even sure it would work kang, said dokuan wanted to just test it out. He said that this was a pilot project for doing that. So, yes, you could call it a pilot project, but this was a project that traded on the open market. People did lose money who invested or tried to not even invest just store their money in stablecoin basis, because the stablecoin is under one cent at the moment anyway, that was in the past just wanted to make you aware, like always whats happening today with dokwans current Stablecoin ust, well tara, founder dokwan, has shared plans again to save the ust stable queen peg. Here is dokwans tweet thread from early this morning. Addressing the situation ill. Read you a few key tweets: dear terror community. I understand the last 72 hours have been extremely tough on. All of you know that i am resolved to work with every one of you to weather this crisis and we will build our way out of this together.
Ust is currently trading at 50 cents. A significant deviation from its intended peg one dollar, and this next thing may sound a little complicated but stay with me. The price stabilization mechanism is currently absorbing ust supply over 10 percent of the total supply of the staple coin, but the cost of absorbing so much stable coin at the same time has stretched out the on chain swap spread to 40 percent and luna price has diminished Drastically absorbing the arps, so the cost of buying back so much of the stablecoin is severely diminishing, terrell lunas price. At the moment, before anything else, the only path forward will be to absorb the stable coin. Supply that wants to exit before ust can start to re peg. There is no way around it. We propose several remedial measures to aid the peg mechanism to absorb the supply, so i will link this down below if you want to read more of it yourself but tl, dr theyre, trying theyre trying to buy back the supply and regain the peg dokuan finishes by Stating this, the terra ecosystem is one of the most vibrant in the crypto industry, with hundreds of passionate teams building category defining applications within as long as these builders tfl among them tara foundation, labs among them continue to build. We will come out of this together. Short term stumbles, do not define what you can accomplish. Taras return to form will be a sight to behold, were here to stay and were going to keep making noise interesting rallying the troops as a good leader should we will see my take on this is whether or not ust their algorithmic, stable coin makes it terra Luna, the ecosystem in general will make it if the developers stay and if the building keeps happening and right now, it is when in doubt, zoom out and understand that were witnessing innovation.
Work itself out in real time globally and with massive innovation, comes massive experimentation, which is equal risk and opportunity now think about this. Some very interesting perspective. My question now is: where will contagion show up from this ust meltdown, meaning how many crypto funds and projects were holding usd, how many custodians lending clients funds in anchor etc? This is cryptos bear stearns lehman brothers moment, but here there are no government bailouts, and that is the double edged sword of crypto the beauty of crypto. Yet the double edged beauty give me your thoughts down below and next up we do have good news right today. Is not all bearish if you think long term, for example, a major new york digital media company has just added bitcoin to its balance sheet. Actually, they added this bitcoin back in q1 of 2022, we are just getting the disclosure to the sec today, town square media, a new york based digital marketing and radio station company is the latest business to back the original cryptocurrency, with its addition of five million dollars Worth of bitcoin to its balance sheet, this is the direct tweet where we learned this information in an sec filing today, town square media with the stock market ticker tsq based in new york, stated during the first quarter of 2022. The company invested an aggregate of five million dollars in bitcoin. The company believes in the long term, potential of digital assets as an investment.
They also said the company may increase or decrease its holdings of digital assets at any time, based on our view of market conditions. So theyre saying that if it dips they could buy more accumulate the dip or if bitcoin goes up, they do reserve the right to sell and take profits, but another publicly traded company has bought bitcoin anyway. That is the video as this cryptocurrency market develops ill.