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Bitcoin | The Prevented Crypto Crash | BTC and USDTHey guys, I hope you are doing fine and I really hope that you didn't lose (much) in the LUNA / UST drama. This is going to be a little bit different than my usual ideas on TradingView. What we witnessed the last couple of days was what I consider a minor Crypto crash that could have developed into something even worse. On the one hand we could argue that this was an overdue cleansing of the Crypto market forced by the breakdown of an algorithmic stablecoin, that just wasn't "well-developed", but on the other hand we prepared us, that this drop could occur once we lost the falling wedge and the price couldn't stabilise around our January / February lows. This was just very basic TA. Of course the LUNA / UST crash accelerated the whole thing. But in the end Bitcoin had to go down because there wasn't any support. I told you that losing $28.8K would be a very hairy situation and indeed it was! It didn't hold up. You can see on the 1HTF that BTC got some short-lived support around the January '21 low at about $27.678 but after that $30K was too big of a resistance and brought BTC all the way down to yet another low at 25.338. That monster candle of support at 9 am yesterday was beyond important. You all have no idea how important that actually was. Now to fully understand what did and what could have happened, we'll need to take a look at the USDT/USD chart. Now do me a favour and compare these two charts next to each other: Once BTC lost $28.8K as support at around 10pm on Wednesday, we saw that Tether (USDT) started to lose its peg to the US Dollar (first white arrows in the charts). This undermines what significance that $28.8K level actually had. Actually, the process started earlier, but given the fact that 1 USDT is not always 1 USD, but rather ~0.99 USD, we will not discuss the smaller alterations before 10pm. After that Tether was able to almost regain its peg. However, once BTC lost the $27.678 level, causing "real" panic, Tether was put in a position that could have ended in a "real" crypto crash beyond what we can imagine imo. Take a look at the second white arrows in the chart at around 6 am yesterday. The sell off that started with losing that key level (Jan '21 low) and the panic that set in caused Tether to completely lose its peg ending with 1 USD being worth ~ 0.94 USDT, that's almost a 6% drop. Now I'm not someone who concentrates on the what-ifs, but in this case it's different. You all probably know that Tether is not an algorithmic stablecoin (as UST was), but instead a stablecoin that claims to be backed by FIAT currency, because for each Tether USDT there is (or better to say there should be) 1 US Dollar in Tether's reserve, thus making it stable. Unfortunately or fortunately (that is depending on your own point of view), Tether is not solely backed by the US Dollar, but the company behind Tether used these US Dollars to buy "other" assets. They claim to be transparent about what they actually hold and have put a website online, which informs about their holdings here: tether.to So, what is the issue here? According to their website, Tether's reserve consists of: - 6.38% Other Investments (Including Digital Tokens) - 5.27% Secured Loans (None To Affiliated Entities) - 4.61% Corporate Bonds, Funds & Precious Metals - 83.74% Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper That makes Tether vulnerable to the market's movements because essentially, their company is a market participant, that has a big exposure in major asset classes. And not only is Tether vulnerable when it comes to BTC's movements, but also vulnerable to the big US indices and their movements such as the NASDAQ, S&P500. Now given the fact that we lost crucial levels on BTC, people panic selling and withdrawing their USDT to USD and with the major US futures being red during that time frame, this could have developed into a death spiral IF the sell pressure would have continued. At some point Tether would have had to sell their assets at a loss to provide enough liquidity for each Tether withdrawal. Meanwhile Tether's CTO essentially tweeted that everything was ok and that there would be enough liquidity for all withdrawals. But put yourself into his shoes. Would you tweet anything else? You probably wouldn't. Does that mean that this is the truth? Well... The points I'm getting at are: a. We should be very very thankful to whoever bought at the lows around $25.3K and therefore ending what could have lead to a big (maybe even the biggest) Crypto crash. b. We should also be thankful to everyone who bought Tether at its lows and therefore possibly preventing a tragedy. Now comes the most important part: c. Tether is and has always been a risky asset and it continues to be. Now a huge chunk of my portfolio consists of USDT. But I would advice you to diversify your portfolio to reduce your overall exposure. Get some USD, get some BUSD. d. Only invest what you can afford to lose. Full disclosure: I don't want to spread FUD or panic. I just want you to understand the "hidden" risks. Namaste
COINBASE:BTCUSD
by PagaLui
♨️BLACK SWAN for UST -38% 🔻, LUNA & BTC❗ 🔂 Recently we watched TerraUSD (UST) stablecoin briefly has lost its dollar peg since this week , falling even to 0.616$ recently . Its Bigger sister token, LUNA, also fell more than 80%. UST losing its $1 peg this weekend wasn't the first or the largest in Terra’s history. this is just an example of BLACK SWAN in crypto space but wasn't and won't be the last one ! What is UST? UST is a stablecoin such as usdt or usdc or busd , a so-called algorithmic stablecoin, works with LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics. In theory, these mechanics work to ensure traders can always swap $1 worth of UST for $1 worth of Luna, which has a floating price and is meant to serve as a kind of shock absorber for UST's price. What happened? First of all, we need to know that there are many popular protocols in the Terra ecosystem that were locked in more than $ 30 billion before yesterday. The point is that several billion dollars of locked-in capital was the Luna currency, which was used as collateral for borrowing. what does it mean ?? Well, you can borrow about 60% of the collateral and invest it elsewhere. This difference between the collateral and the loan must also remain constant, because the protocol must ensure that your loan is repaid, and if the dollar value of the collateral decreases, the protocol will automatically withdraw the collateral and sell it on the market to clear the debt. This was the maximum amount of pressure due to the collateralized Luna. On the other hand, in the last few days, due to the decrease in the profits of Terra network and due to better competing protocols, the demand for this network decreased, which is accompanied by sharp declines in the crypto market last week (probably triggered by the downward trend of the SPX index and stocks) and caused a malicious cycle : 🔻SPX and stocks crash >>>(🔻BTC🔜 >>🔻 Crypto market 🔜>> 🔻LUNA🔜 >> 🔻UST 🔜>> 🔻BTC🔂) Maybe one of reason of bitcoin dump was triggered because Terra Foundation moved $1.3 billion worth of BTC to save UST value. This lead the BTC panic selling and LUNA coin price crash. We will we will see some recovery once the FUD(fear, uncertainty and doubt) is over, also Terra foundation said that it will buy back all the BTC once UST demand increases. -------------------------------------------------------------------------------------------------------------------- 👉This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate 💜 if you're a fan of my Ideas PLZ follow me and give a big thumbs 👍 OR drop comment 🗯
COINBASE:BTCUSD
by PRO_SMART_Trader
UST killed LUNAIt is starting to be apparent that algorithm stable coins are toxic and verging on Ponzi schemes. I was not aware of UST, LUNA's based stable coin, until somebody pointed out to me that it is the reason that Luna is tanking. Although initially Luna was dropping because of weakness in the market, it probably triggered a run on the money for UST and the algorithm could not stabilize UST which caused further panic and selling, a vicious cycle sinking both Luna and UST together. This is my impression at the moment and I would be very interested in detailed study and explanation of what happened. Just as an exercise and fun let's try to predict UST next move using technical analysis. We can see a double bottom/ harmonic forming and the technicals pulling out of oversold. I am predicting a move of UST to the channel's resistance at 0.71. Let's see.
Editors' picks
ULong
by nagihatoum
131
100$☑️ LUNA BUY ZONES - WAVE 5 TARGETSIn our last Luna analysis we predicted the rise up to $100 as our target using the first wave extension theory as the foundation of our ide as seen below Today we will be talking about our buy zones inorder to be ready to ride the 5th wave. As you can see from our fib retracement tool, We are currently trading above the 0.236 region drawn from the end of wave 2 to end of wave 3, however trading below support. Next area of interest will be the next available support @$38 region, touted as our last line of defense for continuation in the case of volatility in our original analysis. 0.382 Region is now our last line of defense, I personally don't see it going below the 0.382 region as it aligns with the bottom of our rising wedge pattern which looks scary btw. You can try your luck with orders at the 0.5 region but i don't see that happening. Take profit zone is at the $150-157 region, with our main target withing the Red Zone to complete wave 5. If you agree, pls leave a like and share your thoughts in the comments. Make sure to manage your risks.
Long
by RektMyMom
The Death of (Terra) a StablecoinAn algorithmic stablecoin sounds complicated, but that doesn't have to be. That's how Terra envisioned its algorithmic stablecoin and why it inevitably crashed. Here's how stablecoin Terra & Luna work: 1. In 2018, Terra network was created with two native tokens. Let's call them Terra (UST) and Luna (LUNA), of which the reasons will become apparent later on. 2. Terra is the stablecoin of the two and Luna has a variable price. These tokens are nothing more than numbers and a protocol on the blockchain. 3. For the ecosystem to work, we need to find people who want to buy these tokens, we do marketing. 4. Luna's price can vary, and is determined by the good old concept of supply and demand. Luna's price will be right in the middle. 5. If people find Luna fantastic, the demand for Luna goes up and so the price goes up, or at least not to zero. 6. Now here come's the tricky part: the blockchain promises that people can always exchange One Terra for $1 worth of Luna. That means if Luna is trading at $0.5 you get 2 Luna for One Terra. When Luna is trading at $4 you get 0.25 Luna for One Terra. If Luna trades at $10 you get 0.1 Luna and so on. The price of Luna can vary, but One Terra can always be exchanged for $1 worth of Luna. The reverse is also true and possible, people can always exchange $1 worth of Luna for One Terra. 7. Now we make an automated smart contract to make this exchange possible. Et Voila, stablecoin Terra is created. 8. Terra should always be worth $1. So terra should always trade at $1. If Terra trades above $1, arbitrage traders will buy Luna and then sell Luna for Terra for instant profit. If Terra trades below $1, arbitrage traders will buy discounted Terra and exchange it for Luna for instant profit. Arbitrage traders will push the price of Terra back to $1 if it deviates. 9. Luna's price can fluctuate but that doesn't matter. As long as Luna is not zero, you can exchange Terra for $1 worth of Luna and Luna for around $1 of Terra. Now we need to make sure Luna doesn't go to zero, since that would turn out very bad. So we need to give fundamental value to Luna, these are the ways to do this: - Collect transaction fees from people who exchange Luna for Terra & Terra for Luna and distribute (a part of) these fees to Luna holders as interest. - Create an ecosystem of smart contracts and applications on top of Luna and terra in which Luna is treated as the native currency to use this ecosystem. And ascribe a lot of value to it. This reinforces each other pretty well. The more fees you collect and distribute to Luna holders, the more viable your ecosystem gets. The more applications are being being built, the more Luna is being bought to interact in the ecosytem & the more fees are collected. But besides this, there's no algorithm explicitly saying that Luna always has a particular amount of value. The algorithm just lets people exchange Terra for Luna. Luna is only valuable if people think it’s valuable and believe in the long-term value of the system that you are building. The danger arises when people suddenly turn their back on Luna and think "Wait, it's all useless and it isn't real." and all sell their Luna tokens for Terra, which should always be equivalent to $1. If people sell their Luna, the price of Luna goes down. If people sell their Terra, you might think "the price of Terra can't go down because of the algorithm!". So if Terra drops to $0.97, arbitrage traders would buy it and exchange it to $1 worth of Luna for instant profit. Well. The problem is that when people lose trust in the whole system, they will dump both Luna and Terra. It looks like this: - Someone sells their Terra, and Terra drops to $.97 - An arbitrage trader buys 10 discounted Terra and exchanges it for Luna. Luna trades at $40 so the trader gets 0.25 Luna. (because exchange of Luna is at $1 par.) - Then the arbitrage trader sells their Luna, which drops the price of Luna to $20. - A second person sells their Terra, and Terra drops to $0.97. - An arbitrage traders buys 10 discounted Terra and exchanges it for Luna. Luna trades at $20 and the traders gets 0.5 Luna. - Which the arbitrage traders sells again, making the price of Luna drop even further. - Now Luna is worth $10, so 10 Terra gets you 1 Luna, which then gets sold, so Luna goes to $5, so 10 Terra gets you 2 Luna, etc. There's no stopping this process, it's a death spiral going down fast. Eventually Luna trades at $.01 and 10 Terra gives you 1000 Luna. And when you try to sell your Luna, you can't, because there are no buyers left and there are no arbitrage traders left who buy discounted Terra to exchange for Luna. The founders are actively searching for a solution, one is looking for capital of investors and the other is to mint way more Luna, so that One Terra can reliably be exchanged for $1 worth in Luna. Even if that means bazillions of Luna. Thanks for taking the time to read this idea. Stay safe out there. Support by following and sharing!
by jonathanvn
4
USTUSD Total Peg Failure vs. USDTUSDUST has lost its peg to USD, and I do not forsee any attempts to repeg the stablecoin as being successful. This has significant implications for USDTUST or "Tether": 1.) The psychological "suspension of disbelief" has been broken. Reality has set in that stable coins can, and have, lost their peg. Previously there was no major stablecoin to have completely broken down in such a way that affected the whole market so significantly 2.) Tether has questionable collateral backing, and these backings will see significantly increased scrutiny in the coming days. 3.) If Luna can fall from such heights with such velocity, an unprecedented and tangible seed of fear is planted for all other crypto assets. Time will tell, but there may not be much of it left.
COINBASE:USDTUSDShort
by ProjectIcarus
Will TerraLuna be resetted?It is really sad that $LUNA got dumped so hard. TerraLuna got direct relation with TerraUSD (UST). Why did $UST, which is supposed to be a stable coin, also crash? $UST is unique when compared to others. $USDT, $DAO, and the like are backed up by fiat. So the value follows the $USD. The $UST has a different way of keeping the value of the UST at 1 USD. TerraUSD is a decentralized stablecoin running on $ETH that attempts to maintain a value of US$1 Unlike centralized stablecoins, $UST isn't backed by USD in a bank account. Instead, in order to mint 1 TerraUSD, US$1.00 worth of TerraUSD's reserve asset ( $LUNA ) must be burned. The conclussion is UST is not stable coin. $UST is a so-called algorithmic stablecoin. It works with $LUNA to maintain a price of $1 using a set of on-chain mint and burn mechanics. I personally really love the value of the concept of TerraUSD. However, it is crazy at the same time to backup stable coin with something not really stable. Finally, TerraUSD (UST) as well as TerraLuna (LUNA) lost the trust. In the charts I put the price of Luna on the left, and the Capitalization of Luna on the right. I set the line of the lowest beginning capitalization. It was 291M, and sadly, now the capitalization hit 50M. TerraLuna has totally lost the trust. Eventhough there will be people buy it again, I don't think that the price will recover in short.
by albusthami
1