Bitcoin traded below $30,000 on Monday, amid market uncertainty brought about by the ‘depegging' of UST—an algorithmic stablecoin whose value is supposed to remain equivalent to $1.
At publication, UST is trading at $0.92, although the ‘stablecoin’ saw lows of $0.6050 on the Binance UST/USDT trading pair.
In this breaking episode of The Scoop, host Frank Chaparro spoke with crypto researcher Mika Honkasalo, who appeared on the podcast to provide a detailed look at how the UST drama is unfolding.
As Honkasalo explained, while UST has experienced depegging before, this time around is structurally different:
“I think people at first didn't really realize that it would be a real thing, because they had seen something similar before and they didn't realize that the structure of the market had become a lot more averse to UST than it previously had. And I think what you're seeing today is sort of that just escalating or going further.”
Although the Luna Foundation Guard announced plans yesterday to support the UST peg with $1.5 billion worth of assets, whether or not UST returns to its peg will likely come down to whether the buyers or sellers win out.
As Honkasalo noted during the interview,
“Whether or not it maintains the peg today is very much a question of: if the sellers sort of run out of tokens and the buyers have more, the buyers will live to fight another day here in the mid-term.”
As for the future fate of Luna and UST, Honkasalo thinks much of its success will rest on macro forces outside of its control.
“I think that if the market turns positive, it will be much easier to keep the whole Luna ecosystem going. But if it continues to be more negative than this, the next wave of sells could be even much worse.”
Episode 41 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Mika Honkasalo, Crypto Researcher.
Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.
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