One of the more interesting things to come out of crypto is the concept of a stablecoin. Popular stablecoins function as a digital dollar, with the tokens being pegged to the US dollar as a way to store money in the digital world instead of a bank account. Stablecoins have become popular enough to the point where the US government is looking into the viability of a legitimate digital dollar held by the government, but there are still a lot of steps that need to be cleared before that happens.
One of those includes a stablecoin scare that we witnessed on Monday that has many shocked. TerraUSD, the 10th highest cryptocurrency by market cap, broke away from the 1-dollar mark in what has been dubbed a shock event. TerraUSD is now floating around 77 cents, marking a 23 percent decrease in the price as investors have been selling the coin ever since it broke from the peg. People are unsure as to how this fall happened, but crypto enthusiasts predict that it was either a group of people trying to break the peg or large withdrawals from the decentralized bank that holds the tokens. Crypto groups all around are donating cryptocurrency to TerraUSD in order to help stabilize the peg, but according to Ilan Solot, it will be a while until TerraUSD returns to 1 dollar as there are still many sell orders to be processed in the coming days, which is going to weigh it down. The crypto market had a slight downturn after the news, and it marks one of the growing pains of this industry.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.