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Terra ‘rescue plan’ afloat as LUNA drops below $5 and Bitcoin reaches $138K in UST

Volatility has taken entire control of Terra’s tokens, and a restoration to a peg to the U.S. dollar appears unlikely.

The 11th of May appeared to be a night of panic on crypto markets, as Blockchain protocol Terra failed to stem the loss of its cryptoassets.

According to data from TradingView, both the company’s native token, LUNA, and stablecoin, TerraUSD (UST), saw significant daily losses.

Bitcoin’s new “all-time high” is doubtful.

UST lost its peg to the U.S. dollar after a major sell-off, which some believed was “coordinated” to destroy the Terra ecology.

Attempts to stabilise the peg with LUNA and Bitcoin (BTC) reserves failed, and as uncertainty gripped the market, both UST and LUNA plummeted to levels inconceivable just days earlier.

Do Kwon, the company’s co-founder, stated that a “recovery plan” would soon be released, however details were limited at the time of writing.

According to online rumours, additional significant cryptocurrency companies may be willing to contribute capital to maintain the peg.

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On May 11, UST traded at $0.27, after temporarily falling to $0.25, which was 75 percent below dollar parity.

During the month of May alone, LUNA/USD fell by more than 90 percent to $6.

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BTC/USDT reached absurd levels of around $140,000 on the major exchange Binance, which stopped LUNA and USDT withdrawals on May 9. This was yet another unforeseen consequence of the volatility.

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Bitcoin’s performance is “remarkable.”

Analysts’ reactions to the market’s recovery were characterised by a combination of astonishment and anxiety.

The Tether (USDT) team’s chief technology officer, Paolo Ardoino, seems equally astonished by recent developments, attracting more focus.

Despite possible sell pressure on Bitcoin itself, the largest cryptocurrency had averted a new decline below $30,000 as of the time of writing.

“I believe Bitcoin has performed exceptionally well in light of the Luna saga’s forced BTC selling. There is still a great degree of market volatility, but Bitcoin is generally holding up well at the $30,000 level “Philip Swift, the inventor of the analytics portal LookIntoBitcoin.

“A variety of measures on LookIntoBitcoin indicate that BTC is approaching significant ‘value’ levels, when historically strong hands acquire Bitcoin at value prices. There is also enough evidence that long-term investors are unfazed by this volatility in the short run.”

BTC/USD, along with other risk assets, was exposed to an additional source of volatility on the day that U.S. CPI data was scheduled for release.

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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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