So, what happened?

Terra ( $LUNA) is a DeFi platform that offers various services. They have their own stablecoin called TerraUSD ( $UST). This #stablecoin mimics the price of the dollar and is “officially” pegged with a number of USD behind it. (In reality this is the full value of assets held by the Lunar Foundation Guard…. this includes Bitcoin in addition to USD$).

What happened:
Market was going sideways for a long time. As a result, their AMM (Automated Market Maker) is buying more and more #bitcoin to keep value high.
Recently they wanted to create a new liquidity pool.
Programming error and the entire Bitcoin reserve of LFG (Luna Foundation Guard) is sold.

The result:
– Entire market collapses due to cascade effect
– $UST gets completely de-pegged and does not reach USD value
– COMPLETE MARKET CAP of TERRA is wiped out. The value of $LUNA has dropped from several 100 $USD to a current 0.01 $USD.

Another consequence is that many beginners are now keeping an eye on various other stablecoins. Tether, among others, is feared to be de-pegged as well. Slight panic because it briefly went to 0.98 USD.
This is quite normal. For Tether one is a bit wiser and there is no AMM. Also, their reserves are a mix of equities, USD and Bitcoin. They can play if the value of their used portfolio drops and still ensure stability.

To simplify it, expressed in a handy timeline:

My message to you?

Do not panic.
Do not sell.
Just hold your Bitcoin.
Now might be a good time to do some DCA (Dollar Cost Averaging)

And if you do not know what DCA is?
Or understand why I remain bullish on #Bitcoin ?

Join me on my free telegram channel.
Or have a look at my pen-ultimate course on Crypto and Bitcoin.