Bitcoin (BTC) has dipped below $ 30,000 for the first time in the past 10 months as turmoil over the Earth protocol continues.
Bounce of BTC to $ 29,700
Data from Cointelegraph Markets Pro and TradingView show that BTC / USD hit a low of $ 29,731 on Bitstamp. This is the first contraction below $ 30,000 since July 2021: This decline was likely caused by the decline in equity markets, coupled with some problems for the Terra project stablecoin, TerraUSD (UST).
As Cointelegraph reported, UST witnessed an attack involving mass selling this week, culminating in Terra using its BTC reserves to support UST’s peg to the US dollar. But these measures proved insufficient e UST slipped to a low of $ 0.67.
At the same time, BTC / UST began to behave erratically on Binance, hitting peaks of over $ 42,000 despite struggling to keep $ 30,000 on all other exchanges:
“What caused the huge rise in BTCUST (not BTC valued in dollars, but valued in the UST stablecoin.)”
Which has caused a massive surge in BTCUST (Not Bitcoin valued in dollars, but valued in the UST stablecoin). pic.twitter.com/Xn7qcy4VMZ
– Blockchain Backer (@BCBacker) May 10, 2022
Rumors of a complete Earth meltdown spread quickly on social media. However, the co-founder of the company, Do Kwon, doesn’t seem scared at all. Kwon retweeted a summary of the situation made by Jose MacedoFounding Partner at Delphi Ventures, that these emergency measures on Earth will ultimately lead to a higher level of decentralization for stablecoin:
“The haters will criticize the excessive level of centralization, and for now they are quite right. @LFG_Reserve has made $ UST more robust, but also temporarily more centralized.”
Data from the on-chain monitoring resource BitInfoCharts have meanwhile confirmed Terra’s actions: the balance of the Luna Foundation Guard (LFG) went from 70,000 BTC ($ 2.23 billion) to 0 BTC.
LFG suggested that not all the BTC previously owned have been sold, and that it will undertake to update the community.
Possible return to $ 35,000
However, BTC / USD managed to recover from its collapse, and is currently trading for nearly $ 32,000. Some have even been willing to “buy the dip:” among them Nayib BukelePresident of El Salvador, who confirmed the purchase of 500 BTC at an average price of $ 30,744.
Tonight, analyst Michaël van de Poppe has commented on Twitter:
“I don’t know how deep the correction will go, as the fact that Terra’s UST token lost its peg to the dollar is another factor in the drop. I can only say that the UST situation is only a temporary shock, I assume that Bitcoin will return to $ 35,000 in the next 24-48 hours. “
Currently, the “shock” has not yet resolved: UST is still trading around 8% below the dollar, while the LUNA token has lost 50% of its value in the last 24 hours.
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