The TerraUSD(UST) stablecoin crisis has caused panic among crypto market investors. While the Terra Luna Foundation has already announced a “recovery plan”, it still hasn’t impacted the UST and LUNA prices since they are still on the decline just like the general crypto market.
Do Kwon, TerraUSD’s backers, had previously approached Nexo to ask it to support the UST stabilitycoin. Nexo declined. Antoni Trenchev, co-founder of Nexo said this when he was asked why they had declined to support the UST stablecoin.
“There is only so much I can say about details of a rescue plan which are still ongoing and I don’t want to get intervene in any way. They are our best wishes. We made a decision at the board level that we didn’t think prudent to be involved in at this stage. If they come up around with another proposal that we think makes better sense we might reconsider but for the time being, we are staying on the sidelines.”
The likelihood of the cryptocurrency market recovering
Although the collapse of TerraUSD will most likely affect the algorithmic stablecoins and not the asset-backed stablecoins like Tether, it is being described by some as possibly the “Lehman moment” for crypto. S.C. and Michael Novogratz, crypto billionaires, have lost 70%, 90%, and 80% of their wealth over the last few weeks. But when Trenchev was asked by Bloomberg’s Matt Miller whether he thinks it is a concern for the crypto industry at large, Trenchev said:
“I don’t think it is a Lehman moment. Although it is not the most beautiful episodes, we only get one or two each year. Last year, we had the China ban. The previous year, where we had Covid, we experienced up to half the declines. This time, I believe that there are a smaller number of sellers. What I am seeing on the Nexo platform and what we have goes up to 4 million retail users and a very sizeable institutional clientele and I don’t see them selling anyway the way they did in 2020 or 2021. BTC is currently under pressure because of the massive BTC reserves the Terra Foundation has accumulated. This is what is putting the pressure on the market. It will be interesting to see if $25,000 holds. If not it might very well revisit $20,000, the previous all-time highs of 2017-2018, will run but I think by demitting at the very latest, large-scale buying will come in.”
Trenchev answered when Trenchev was asked to explain the date he thinks large-scale purchases will take place.
“I think around 20… first when the swelling of this foundation starts which you know from our estimates should be near. So $25,000 per Bitcoin or $20,000 worst-case scenarios should be the turning around point.”