• Advertise
  • Submit a Press Release
NewsBTC
Bitcoin & cryptocurrency news
Crypto.com Logo
  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play GamesTry
  • Bet & WinTry
  • Bitcoin Casino ReviewsTry
No Result
View All Result
  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play GamesTry
  • Bet & WinTry
  • Bitcoin Casino ReviewsTry
No Result
View All Result
NewsBTC
No Result
View All Result
Terra, a marble in a strange land
Nexo Logo

ARK: Now Decoupled From Terra, “Bitcoin’s Selling Pressure Should Subside”

Eduardo Próspero by Eduardo Próspero
2 months ago
in Bitcoin, Terra (LUNA)
Reading Time: 4 mins read
Advertisement

The Terra / Luna / UST collapse keeps on generating headlines. This time, we’ll use the data in ARK’s “The Bitcoin Monthly” report to establish its impact on the bitcoin ecosystem. Remember that the non-profit organization LFG, AKA the Luna Foundation Guard, accumulated BTC to defend UST’s peg to the dollar. In a then-delated May interview, Terra’s Do Kwon said that they were trying to get to $1B in BTC so that “besides Satoshi, we will be the largest single holder of Bitcoin in the world.”

Related Reading | Terra Beats Tesla As Second-Largest Corporate Bitcoin Holder After $1.5B Purchase

Do Kwon also proclaimed, “within the crypto industry, the failure of UST is equivalent to the failure of crypto itself.” At one point, it appeared that BTC and UST’s destinies were inextricably linked, but the bitcoin network absorbed the collapse nearly unscathed. Let’s look at ARK’s numbers and try to figure out how it did it. 

5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

Terra, The Largest L-1 Blockchain Failure Ever

At this point, everybody knows what happened with Terra. Nobody knows how it happened, though. Was it a coordinated attack or did the natural market’s forces trigger the death spiral event? We wouldn’t know, but the fact of the matter is that the UST de-pegged from the dollar, and this caused a bank run that the Anchor protocol couldn’t handle. The whole situation created the death spiral and the eventual demise of the algorithmic stablecoin and its twin, LUNA.

How big was the collapse? According to ARK’s report:

“In addition to causing the crash in UST and Luna, we believe Terra is the largest layer-1 blockchain failure in crypto history, wiping out a combined $60 billion of market capitalization between UST and Luna.”

Huge in size by any metric, but, how does it compare to previous crypto collapses? The only comparable one was “the Mt. Gox hack that stole 5.7% of total crypto market cap in 2014, Terra’s collapse destroyed roughly 2.7% of crypto’s total market capitalization.” The Mt. Gox hack almost destroyed the bitcoin network at a time when it was more vulnerable. The Terra collapse felt like a breeze in comparison, but, as the numbers show, the impact was significant. 

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
Get 110 USDT Futures Bonus for FREE!

BTCUSD price chart for 06/07 - TradingView

BTC price chart for 06/07/2022 on Eightcap | Source: BTC/USD on TradingView.com

How Did The Terra Collapse Affect BTC?

Besides the LFG foundation reportedly selling its 80K BTC, the collapse created extreme selling pressure on bitcoin. According to the report, “exchanges recorded net inflows of 52,000 bitcoin, the largest daily inflow in BTC terms since November 2017 and the largest inflow ever in USD terms.” These are notable numbers. 

Terra, Bitcoin Net Flows

Read our comparison of 50 different crypto casinos. Find out who has most generous bonuses, best UX, knowledgeable customer support and best provably fair games.
Bitcoin Net Flows To and From Exchanges | Source: ARK’s “The Bitcoin Monthly”

According to the bitcoin blockchain, the account associated with “LFG currently holds 313 BTC, down from 80,934 BTC held prior to Terra’s unraveling”. Did they sell the rest, though? Nobody knows for sure. Back to the report: 

“To backstop UST’s peg, The Luna Foundation Guard (LFG) reportedly sold most of its ~80,000-bitcoin reserves, contributing to this record inflow.”

Surprising even hardcore bitcoiners, the network resisted this massive sell-off without breaking a sweat. Sure, bitcoin’s price suffered, but the blow wasn’t even close to being fatal. And ARK’s prediction reflects that fact, “now decoupled from the Terra blockchain, bitcoin’s selling pressure should subside, yet contagion in the crypto markets is still inconclusive.” Why? Because “bitcoin’s more secure and conservative blockchain should gain market share.”

Are Algorithmic Stablecoins Even Possible?

To answer this we’ll quote NYDIG’s report “On Impossible Things Before Breakfast,” which comes with the subtitle, “a post-mortem on Terra, a pre-mortem on DeFi, and a glimpse of the madness to come.” As the titles gave away, NYDIG believes that not algorithmic stablecoins nor DeFi as it currently stands are possible. Why? Well…

“No matter how well intentioned, all algorithmic stablecoins will fail and the vast majority – possibly all – of DeFi’s current versions will fail, where “fail” here means not gaining sufficient critical mass to matter, being hacked, blowing up, or being altered by regulation to the point of non-viability. In the end, the Terra project could control the supply of its money, but it couldn’t make its people value it. A printing press was the only (non)answer. Sound familiar? Lacking a lender of last resort, DeFi (re)creates the problems solved by central banks. Bitcoin solves the problems created by central banks.”

Related Reading | TerraLabs Sold Over 80,000 BTC To Rescue Its Stablecoin

As it usually happens, we could summarize this whole article with the old adage: “Bitcoin fixes this.”

Featured Image by Louis Maniquet on Unsplash  | Charts by TradingView
Tags: ARKark investARK’s “The Bitcoin Monthly” reportDeFiDo KwonLFG foundationLUNAmt. goxNYDIGOn Impossible Things Before BreakfastTerraTerra collapseThe Bitcoin MonthlyThe Bitcoin NetworkThe Luna Foundation GuardustUST collapse
Tweet123Share196ShareSend
Win up to $1,000,000 in One Spin at CryptoSlots
Eduardo Próspero

Eduardo Próspero

Eduardo Prospero is an author, a content writer, and a professional rapper. A Bitcoin maximalist in disguise. Working on a Bitcoin book. Venezuelan. He wrote a novel, but it's only available in Spanish. It's called "La Tormenta."

Related Posts

Bitcoin Still Very Bearish, Says Peter Schiff

Bitcoin Still Very Bearish, Says Peter Schiff

12 hours ago
Bitcoin Funding Rates Remain Positive As Bullish Sentiment Continues

Bitcoin Funding Rates Remain Positive As Bullish Sentiment Continues

13 hours ago
Bitcoin

Quant Explains How Bitcoin NUPL Cycles Are Getting Less Volatile With Time

2 days ago
Taro Taro Taro

Lightning Speed: Taro Wants To Abolish Cross-Border Payments, Disrupt The Market

3 days ago
Bitcoin Is An alternative To Economic Condition, Says CEO Of Franklin

Bitcoin Is An alternative To Economic Condition, Says CEO Of Franklin

3 days ago
Bitcoin Bear

Bitcoin Bearish Signal: Whales With 1k-10k BTC Depositing To Exchanges

4 days ago

Premium Partners

Top Brokers

PrimeXBT

PrimeXBT

Review · Visit

Top Casinos

BitStarz

BitStarz

Review · Visit
7BitCasino

7BitCasino

Review · Visit
Punt Casino

Punt Casino

Review · Visit
mBit

mBit

Review · Visit
CryptoGames

CryptoGames

Review · Visit
Bspin

Bspin

Review · Visit

Sportsbooks

1xBit

1xBit

Review · Visit

Nukplan (NKPL) Is Now Available for Trading on LBank Exchange

August 16, 2022

Blockchain ACGN Game NEO FANTASY, Rising Star Of Gamefi!

August 16, 2022

Tigon Mobile P2E Game Bless Global Pre-Registration Begins — “Expanding the P2E Ecosystem”

August 15, 2022

Revolutux, Solana, and Chainlink: Why the cryptocurrency market is optimistic about these names

August 15, 2022

The new Polygon Web3 platform, FrontFanz, signs over 100 more creators to join their platform

August 15, 2022

ABOUT US

NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Here at NewsBTC, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies.

We cover BTC news related to bitcoin exchanges, bitcoin mining and price forecasts for various cryptocurrencies.

COMPANY

  • Advertising
  • Comments Policy
  • Privacy Center
  • Sitemap
  • About Us
  • Contact

Technical Analysis

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Ripple (XRP)
  • Chainlink (LINK)
  • Cardano (ADA)
  • Tezos (XTZ)

LINKS

Crypto Prices from Nomics

Cryptocurrency news

  • Bitcoin
  • Ethereum
  • Ripple
  • Chainlink
  • Cardano
  • EOS
  • Tezos

© 2021 NewsBTC. All Rights Reserved.

  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play Games
  • Bet & Win
  • Bitcoin Casino Reviews

© 2021 NewsBTC. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy Center or Cookie Policy.