Earlier today, a few Binance users noticed unusual behavior in UST’s price. The stablecoin lost its $1 value a day before but dipped further to as low as 30% away from its peg. Following the massive fall, order books on Binance for the crypto token went blank.
At the moment, the FUD in the Luna ecosystem is more intense than ever, and investors in the stablecoin are stunned. The stablecoin dropped as low as $0.68, suffering a more intense dip than Bitcoin and other volatile crypto assets.
A Hell of a Week for the Terra Protocol
The UST is backed by Luna token, and the protocol has gone through one of its most difficult times in the past week. The price of Bitcoin lost more than 10% of its value in less than a week, and so did Luna. However, the price of LUNA and UST have plummeted more than anyone would have envisioned, with LUNA losing 50% of its value in the last 24 hours and UST experiencing an intense price instability.
A Reddit user traced a transaction done by the Luna foundation and discovered that Luna moved all its BTC out of its wallet to a decentralized exchange. The blockchain transaction revealed that 37,000 BTC worth over $1 billion was moved out of the wallet to a GEMINI wallet address. The transfer to a decentralized exchange insinuates that the protocol likely intends to sell its Bitcoin reserves to salvage the value of LUNA and UST.
Details of the transaction can be found here:
https://www.blockchain.com/btc/address/bc1q9d4ywgfnd8h43da5tpcxcn6ajv590cg6d3tg6axemvljvt2k76zs50tv4q
Following the panic in the LUNA ecosystem, a crypto influencer on Reddit with the name Gnarley_quinn reminded his followers that he had raised the alarm concerning the stability mechanism of the Luna protocol earlier. Still, Luna supporters dismissed his signals as unnecessary FUD.
In the meantime, UST has slightly bounced back up, trading at $0.924. It is yet to be known if the price recovery will make previous sellers key into the protocol once again.
