Bearish Market: UST Battles for Stability, LUNA Crashes and Fear Grows

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The panic of Bitcoin and crypto market plunging hasn’t been digested fully but it got to choke us more when the UST stablecoin that has however been toe to toe with the U.S dollar lost its peg to it. During the weekend, there was a slight struggle of it between $1 and $0.99 but it was certain that it won’t go beyond that and that it will rise up again but shockingly, it fell to $0.949 according to coinmarketcap at the time of writing.

The logic between UST and LUNA is that, when the price of UST exceeds $1, LUNA tends to burn more of the stablecoin so that there can be circulation supply in the market but when it falls below $1 like it just did, units are however taken out of circulation in order for LUNA to be purchased. But the thing is UST was supposed to be an algorithm stablecoin, that is, it’s supposed to have price stability and also a balanced circulation being that it’s pegged to the U.S dollars.

Now that the UST is no longer pegged to the U.S dollar what do you think will happen to the crypto market or ecosystem, and do you think there’s a way for it to bounce back? Well, I think so because I saw a report where the Luna Foundation Guard is building a reserve for stablecoins or rather UST by lending $1.5 billion in BTC and UST with the hope of protecting the UST peg by all means necessary.

Even the LUNA itself isn’t performing well in the crypto market as it is still affected by the dipping with its current price sitting at $48.73 and a 24hr drop in the price of 25.73% and a 7 days drop in price with 41.28% according to coinmarketcap as at time of writing. Both UST and LUNA are developed on the Terra blockchain so seeing them experience “chaos” as the co-founder Do Kwon described it’s not surprising.

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