The UST stablecoin lost its peg to the US dollar
Terra Labs’ UST stablecoin has lost its parity with the U.S dollar due to the collapse of the crypto market. A few days ago, the UST rate of exchange dropped to $0.62. For this reason, Binance crypto exchange temporarily disabled the withdrawal of funds in the Terra blockchain.
TerraUSD (UST) is one of the largest stablecoins with the peg to the US dollar. Altcoin LUNA is used to stabilize the price of UST, so their prices are inextricably linked. LUNA has also lost significantly in value. So far, Luna Foundation failed to stabilize the situation, so UST and its sister currency LUNA are in freefall.
The fall of the UST rate of exchange was also noted by the United States secretary of the treasury Janet Yellen. According to her, such a situation could arise due to a rapid growth of popularity of the product. Yellen again called on American regulators to develop laws and regulations for stablecoins.
The USDT rate of exchange also decreased by 5%, dropping to $0.95. But after that its rate partially restored, rising to $0.98. USDT is the largest stablecoin which is present on most crypto exchanges. It ranks third in the crypto market. Only Bitcoin and Ethereum are higher in the list.
Experts believe that amid these events, stablecoins’ credibility will decrease significantly, and the LUNA project will not be able to get back on its feet. Some analysts believe that other major cryptocurrencies risk meeting the same fate as TerraUSD.
Recently, the price of Bitcoin has also dropped dramatically, pulling other crypto assets along with it. For this reason, more than 40% of investors, who invested in Bitcoin and other digital currencies, went into the red.
In January 2022, Bitcoin abruptly fell in price due to the statement of the Bank of Russia, in which the regulatory authority proposed to completely ban the issue, trade and production of cryptocurrencies in Russia.
In May, the crypto market shows negative growth. Moreover, many digital currencies are falling even faster than Bitcoin. Many analysts think that the rapid increase of the crypto market should not be expected anytime soon. According to some of them, the price of Bitcoin will fall further.