UST Resumes Spiral After Quiet Day Orbiting 90 Cents

TerraUSD (UST) resumed its downward spiral Tuesday afternoon New York time, sinking below 80 cents as it breached a relatively quiet 12-hour period when its price remained stable around 10% off its dollar peg.

• Terra’s shaky stablecoin has struggled to maintain its $1 target since this weekend’s dips began; it reached as low as 68 cents Monday in a swan dive that prompted billion-dollar rescue efforts from reserve overseer, the Luna Foundation Guard.
• Crypto market participants, regulators and critics are keenly watching UST’s flailing to measure up to the concept of algorithmic stablecoins, which rely on programs (over full collateral) to stay at $1 a coin.
• “I think that simply illustrates that this is a rapidly growing product, and that there are risks to financial stability and we need a framework that's appropriate," Treasury Secretary Janet Yellen said of UST at a U.S. Senate hearing Tuesday.
• Sinking to 78 cents and lower late Tuesday, UST ruptured the day’s staid trading session amid reports by The Block that LFG was searching for a $1 billion bailout. Firms reportedly involved in the talks did not immediately respond to CoinDesk.
• LUNA, the token meant to act as a backstop to UST's price, lost 63% of its value over the past 24 hours, plunging from $44.18 to less than $16 at press time. The token traded hands above $86 less than a week ago.

UPDATE (May 10, 2022, 22:28 UTC): Adds context on LUNA's price.