Bitcoin fell below the $26,000 level since December 2020. (Photo credit should read CFOTO\/Future Publishing via Getty Images)<\/p>\n
CFOTO | Future Publishing via Getty Images<\/p>\n
Investors have been eager to find out what happened to the $3 billion in bitcoin bought up by crypto firm Terra to back its failed stablecoin. Now, they've got their answer.<\/p>\n
Luna Foundation Guard, a fund set up by Terra creator Do Kwon, said Monday it spent almost all of the bitcoin in its reserve last week in a futile attempt to save terraUSD or UST, for short.<\/p>\n
The foundation had accumulated a total of more than 80,000 bitcoins, which was worth nearly $3 billion last week, as well as other tokens including BNB, tether, USDC and avalanche. Kwon had promised to use the bitcoin in the event of a dramatic fall in the value of UST.<\/p>\n
In a series of tweets, Luna Foundation Guard said it transferred 52,189 bitcoins to \"trade with a counterparty\" as UST fell below its intended $1 peg. A further 33,206 bitcoins were sold by Terra directly in a last-ditch effort to defend the peg, the foundation said.<\/p>\n
As of Monday, Luna Foundation Guard had just 313 bitcoins left in its reserve, worth approximately $9.3 million. The firm said it would use the remainder of its $85 million in crypto assets including some BNB and avalanche to \"compensate remaining users\" of UST.<\/p>\n
\"We are still debating through various distribution methods, updates to follow soon,\" Luna Foundation Guard said.<\/p>\n
UST is what's known as an \"algorithmic\" stablecoin. Unlike tether and USDC, which hold fiat assets in a reserve to back their tokens, UST relied on a complex set of code, coupled with a floating token called luna, to balance supply and demand and stabilize the price.<\/p>\n
When UST began to drop below $1 last week, luna also started to sell off, resulting in a vicious cycle that caused UST to plunge to less than 30 cents while luna became worthless. UST is now worth just 9 cents, according to CoinGecko data.<\/p>\n
\"The big problem when you're dealing with a partially collateralized stablecoin like UST is that your hard collateral bitcoin, in this case is going to be considerably more valuable to [investors] than your governance token,\" or luna, said Frances Coppola, an independent economist.<\/p>\n
Blockchain analytics firm Elliptic estimates holders of UST and luna have lost a total of $42 billion over the past week. Analysis from the company shows that 52,189 bitcoins were moved to a single account at crypto exchange Gemini, while a further 28,205 bitcoins were transferred to Binance. Tom Robinson, chief scientist at Elliptic, said it was \"not possible\" to trace the movement of funds beyond these wallets.<\/p>\n
The debacle rippled through crypto markets, wiping out more than $200 billion of wealth in a single day. Bitcoin on Thursday briefly fell below $26,000, its lowest level since December 2020. The world's biggest cryptocurrency was last trading at $29,526.75, down 1.4% in the last 24 hours.<\/p>\n
\"There's not a whole lot of outstanding sell pressure,\" said Dustin Teander, analyst at crypto research firm Messari.<\/p>\n
\"In a sense, the market is going to take that as kind of bullish.\"<\/p>\n
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Read more: Bitcoin fell below the $26,000 level since December 2020. Continue reading
\n$3 billion in bitcoin was sold in a last-ditch attempt to save UST stablecoin from collapse - CNBC<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"