I made a quick video of my thoughts after learning that UST and Terra (LUNA) were delisted across platforms. The Terra blockchain was halted, then restarted, and is now halted again (May 12, 9:20 pm PST) as well.
If you lost a ton, go easy on yourselves and allow time to process. I would suggest staying away from alcohol and drugs for a few days, too.
This has been a crazy and rapid death of a top ten crypto and its stablecoin. It will be studied for years. There will be a lot of regulation and lessons stemming from this one. We may also see ripple effects to the wider crypto ecosystem. Time will tell.
Some Contributers to the LUNA / UST Death Spiral
- Rumors of whales taking large positions, then dumping and shorting
- There was an $85 million UST to USDC selloff on Curve
- Huge amounts began pulling out of Anchor Protocol
- Once UST was depegged, the confidence quickly eroded
- LUNA went hyper inflationairy as it tried to be converted to support the peg.
- Crypto markets were downtrending for a while leading up the crash.
- The Federal Reserve raising interest rates pushed the market lower
- Shorts and leveraged shorts were relentless on LUNA
- Stablecoin arbitrage bots had a field day with UST pairing with other stablecoins.
Here’s my update video from May 15, 2022: Nothing from Do Kwon. Elliptic tracked the Bitcoin. The Terra forum is deciding how to move forward. Other stablecoins are struggling with their pegs a bit.