Avalanche (AVAX) is paying the price for being one of the collateral assets that maintain Terra’s native stablecoin TerraUSD’s (UST) peg with the U.S. dollar.
Major AVAX dump ahead?
AVAX’s price dropped about 30% to reach $32.50 on May 11, its lowest level since September 2021. Its massive intraday decline coincided with UST dropping to as low as 23 cents, which effectively dented its stablecoin status among traders and investors alike.
The de-peg incident happened despite Luna Foundation Guard, a Singapore-based nonprofit backed by TerraLabs, emptying its crypto reserves to prop up the UST peg. The firm currently holds 1.97 million AVAX worth nearly $74.75 million, according to data shared by analyst CrypOrca.
Luna Foundation Guard reserves. Source: CryptOrca
A similar sentiment can be witnessed in the LUNA market, another crypto LFG