Terra (LUNA-USD) coins are dropping almost 100% in Wednesday morning trading as its sister token TerraUSD (UST-USD), an algorithmic stablecoin, falls substantially further from its $1 peg in the midst of a broad selloff in cryptocurrencies.
Moreover, LUNA tokens, which are governance tokens designed to stabilize the price of TerraUSD (UST-USD), are collapsing 90% to $2.87 as of shortly before 10:30 a.m. ET, as coin supply surged in recent days. Specifically, ~46.24M LUNAs were issued on May 10 and more than 80M additional LUNAs have been issued in the past four days,” according to a Twitter post by Wu Blockchain. As for TerraUSD (UST-USD), “supply burned more than 1.89 billion for 4d, and on May 10, 1.2 billion UST was burned, setting a new record for single-day destruction,” Wu Blockchain added.
“The market is displaying a clear lack of confidence in this ship’s ability to right itself,” said Quantum Economics Chief Executive Mati Greenspan, as quoted by Bloomberg.
Selling pressure comes as bitcoin (BTC-USD) remains around 50% below its all-time high in Nov. 2021. Earlier on Wednesday’s session, bitcoin slid modestly under its key psychological level of $30K, testing levels not seen since July 2021, though it has since recovered slightly to $30.9K. Note that the Luna Foundation Guard has reserves of 80K bitcoins, but the “LFG have been selling their Bitcoin in order to raise funds to push the price of UST back up,” GlobalBlock wrote in a note.
Also, cardano (ADA-USD -21.5%), solana (SOL-USD -32.8%), dogecoin (DOGE-USD -26.7%), polkadot (DOT-USD -30.2%), avalanche (AVAX-USD -44.6%), shiba inu (SHIB-USD -29.2%), polygon (MATIC-USD -30.3%), NEAR protocol (NEAR-USD -46.3%), algorand (ALGO-USD -34.8%) and internet computer (ICP-USD -29.7%) are making pronounced moves to the downside.
April’s inflation report released earlier is perhaps impacting crypto prices more broadly, with the consumer price index jumping more than expected both M/M and Y/Y.
Take a look at what’s next for Bitcoin here.