In one of the most turbulent weeks in crypto’s history, the stablecoin UST depegged from the dollar as significant selling in both Bitcoin and UST’s sister coin, LUNA, pulled UST down from its theoretically permanent $1 peg. UST effectively operates through a system of algorithms which trade its sister coin, LUNA, alongside a host of other cryptocurrencies to maintain a UST value of $1 at all times, making it a ‘stablecoin.’ When this $1 peg slipped as a result of selling in Bitcoin and LUNA, the team at Terra issued more LUNA tokens as a way to buoy the price of UST. However, their attempt to do this was unsuccessful and investors saw the price of Luna drop from $80 to fractions of a penny. Meanwhile, the supposed ‘stablecoin’ UST is trading beneath 20 cents. This failure proved to be systemic as the entire crypto market witnessed a dramatic risk-off event in a cascade of selling resulting from the implosion of UST and LUNA. Coins such as Bitcoin and Ethereum broke through multi-year support and produced a major capitulative event. With that being said, the worst of this correction is definitively over and we should now see a decisive move up into mid-July. Events like these and the inherent volatility which accompanies cryptocurrencies are why we do not directly alert trades, but accumulate for the great reward at the end of this road – a road hardly far off at that.
