Today’s crypto market crash sent shockwaves giving investors a reality check that not everything named ‘stable’ is indeed stable. Even stablecoins are facing the wrath of the market despite their being pegged to the UD dollar. Stablecoins, known as UST act as a hedge against volatility and even in worst-case scenarios, go a little above or less than $1. However, Terra’s (LUNA) UST plunged straight 40% today and reached day low of $0.6065. Though the UST is now recovering in price, the damage to its reputation and most importantly stability is done.
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It is native token Terra bled the most and is still bleeding as it slipped more than 48% in just a day. Terra is struggling to recover and might find it hard to claw back before trading in green. The market might take time to stabilize and several tokens could be buried in deep red.
This Crypto Tycoon Had Predicted Terra’s UST Crash in 2021
Stablecoins are digital money built on the Ethereum platform and is designed to stay at a fixed value. The volatility is minimum with a few ups and downs even if the price of ETH changes and is pegged to the USD. However, today’s scenario was a fact-check that the market can topple even stablecoins which are pegged to the US dollar.
Crypto tycoon and the founder of HEX, Richard Heart had predicted in 2021 that stablecoins “can lead to total destruction.” He predicted that stable coins are not safe and they “trade all your good ones for the bad ones leaving you with the valueless ones.”
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“Think you’re safe? You might not be. If you deposit two kinds of #eth stable coins to a pool to try and make yield, and one fails, the market will trade all your good ones for the bad ones leaving you with the valueless ones. What seemed conservative can lead to total destruction,” he had tweeted.
Richard Heart walked back in memory lane about his prediction and tweeted today, “Why am I always so right? #UST #LUNA.”