Terra (LUNA) tumbled sharply after it saw a FUD hit on TerraUSD (UST) stablecoin, hitting $61, its worst level in three months, after whales dumped $285 million worth of UST as a result. As a result of this sell-off, UST briefly lost its peg against the US dollar, dropping to $0.98.
LUNA, which acts as a collateral to keep the UST dollar value. followTerra’s flexible monetary policy, so when UST values above $1.00, Terra protocol encourages users to burn LUNA and mint UST, and vice versa, when UST prices drop below $1.00, protocol rewards users for their Burn UST and mint LUNA.
Therefore, during UST supply cuts, LUNA’s valuation should decrease. As UST’s supply expands, LUNA’s valuation increases, Will Comyns fighterResearch from Messari said.
The figure below shows a continued downtrend in daily UST supply, in line with the corresponding increase in daily LUNA supply. On May 8, the UST market contracted for the first time in two months, dropping 28.1 million below zero. At the same time, LUNA’s supply grew to more than 436.75 million.
Excessive daily supply versus declining or stable market demand can lead to lower LUNA prices.
Terra’s continued falling price prompted LUNA to test the support once more. It consists of a 50-day EMA near $56.
The post Terra ( LUNA ) fell drastically. Hitting its worst level in three months after a whale dumped UST appeared first on Bitcoin Addict.