Bitcoin traded about 10% below its fair value as it hit a 17-month low, amid the collapse of the UST stablecoin and related turbulence, according to a Glassnode report.
Last week was historic for #Bitcoin, as $LUNA hyper-inflated, $UST failed, forcing the sale of 80k $BTC
Next, the $USDT peg came under pressure for 24hrs, creating $5B in losses, and a near miss with the Realized Price
Read our full break-down analysis👇https://t.co/nYnG04dfDR
— glassnode (@glassnode) May 16, 2022
The Luna Foundation Guard’s reserves of 80,394 BTC did not stop the collapse of the UST-LUNA ecosystem, whose TVL was approaching $40 billion. At the time of the report, the first asset stabilized at $0.125, the second fell 99.9998% from ATH to $0.0002.
The chart below illustrates a sharp rise in LUNA supply (from 343 million to 6.53 trillion, or 99,263,840% on annualized terms; logarithmic scale) against the backdrop of 7.5 billion UST burned, or 40% of the supply (linear scale).
Because of such sharp changes, Terra validators restarted the network twice.
On May 16, the organization said that in its reserves remained only 313 BTC. LFG’s share (80,394 BTC) proved decisive in total inflows of coins onto exchange balances during this period (~88,000 BTC).
\”The events [UST collapse] triggered a contagion effect and panic\”, the experts concluded.
On May 14 there was a decline of exchange balances by 32,000 BTC, coinciding with Bitcoin returning to above $30,000.
On May 16 the organization said that in its reserves remained only 313 BTC. LFG’s share (80 394 BTC) proved decisive in total inflows of coins onto exchange balances during this period (~88 000 BTC).
\”The events [UST collapse] triggered a contagion effect and panic\”, the experts concluded.
12 May the daily volume of Tether’s conversion into fiat reached $2 trillion.
Tether Continues to Honour All Redemptions from Verified Customers During Market Volatility, On Track To Process 2bn Today https://t.co/p1AugHb9Gn
— Tether (@Tether_to) May 12, 2022
For the week the figure stood at sector-record $7.485 billion. The aggregate USDT market cap declined to $75.75 billion.
To stabilise UST, the LFG sold digital gold below the purchase price. The net realized loss of the organisation amounted to $703.7 million, and the total Bitcoin investors’ metric over these two days was $2.5 billion (one of the largest capitulations in history).
The above loss figure for LFG does not include additional losses from swapping BTC for UST and LUNA’s hyperinflation.
The pressure from UST and LUNA woes pushed Bitcoin to the level of its realized price. Previously this metric gave reliable signals of a bottom, when the indicator traded above the price. Last week the first metric stood at $23,940, the second ($26,500) was 9.5% higher.
As noted, the author of the bestseller Rich Dad Poor Dad, Robert Kiyosaki called the Bitcoin crash “great news” and predicted a test of the cryptocurrency at around $17,000.
Earlier, gold-bull and critic Peter Schiff deemed it “quite likely” for quotes to fall to $10,000.
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