Double bubble? Terra’s Defunct ‘Unstable Coin’ Suddenly Rises 800% in One Week

Double bubble?  Terra’s Defunct ‘Unstable Coin’ Suddenly Rises 800% in One Week

Terra’s $40 billion experiment to create a working “algorithmic stablecoin” project has failed dramatically following its collapse in May.

Nevertheless, Its native stablecoin TerraClassicUSD (USTC), formerly called TerraUSD (UST), has prospered in the past week.

A dead stablecoin that walks

recapitulating, UST lost its peg to the US dollar in May following massive withdrawals from Anchor Protocol, a lending and credit platform that offered customers up to 20% returns on their UST deposits. On June 15, the token was almost worthless, trading at $0.005 on cryptocurrency exchange Kraken.

But USTC started to recover afterwards, to the point where its value per token almost hit $0.10 on June 29.. Simultaneously, its capitalization went from USD 65 million to USD 767 million in the same period, according to data from CoinMarketCap.

USTC market capitalization. Source: CoinMarketCap

That is despite the fact that USTC operates as an abandoned token after Terra launched a new blockchain with a new native asset LUNA 2.0, following a “hard fork” in May.

Curiously, the previous version of LUNA 2.0, called LUNA, now operating under the name “Terra Classic (LUNC), has also seen an increase in its market valuation as USTCgoing from around USD 160 million to USD 767 million in June.

Double bubble? Terra's Defunct 'Unstable Coin' Suddenly Rises 800% in One Week
LUNC market cap. Source: CoinMarketCap

Concentrated and massive rise of Terra

According to CoinMarketCap, more than 45% of the trading volume behind the surprising USTC and LUNC price boom has originated from KuCoin, a centralized exchange platform reportedly operating from the Seychelles.

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KuCoin’s main backer is NEO Global Capital, a Singapore-based venture capital firm that also has exposure to financial platforms such as Babel Finance and CoinFLEX.. Both platforms have been facing liquidity issues due to the current decline in the cryptocurrency market.

“This is not a cycle of boom, bust and boom again,” InvestmentU, a financial analysis group, warned in its June 28 note, saying LUNC could decline massively because “the technology behind it is dead.”

“Their raison d’être for (LUNC) has been beaten. And so has their price. While we can appreciate the natural desires of investors to inflate profits, there are better ways to do it than this.”

The outlook looks the same for the USTC, which has failed to fulfill its primary function of providing clients with a stable digital version of the US dollar.

This is a game for whales Dump Next Time ☝️ all newcomers lose money

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