Bitcoin (BTC) Holds Tight as TerraUSD Woes Hit the Crypto Market

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Bob Mason

Wed, May 11, 2022, 4:04 AM 3 min read

Key Insights:

Bitcoin (BTC) held on to early gains going into the afternoon session despite the broader market hitting reverse.
TerraUSD (UST) and Terra (LUNA) woes worsened this morning on news of Terra Lab seeking funding to stabilize UST.
Bitcoin (BTC) technical indicators flash red, with bitcoin sitting below the 50-day EMA.

Bitcoin (BTC) held onto early gains this morning despite TerraUSD (UST) and Terra (LUNA) continuing to freefall.

On Tuesday, BTC rose by 3.11%. Partially reversing an 11.6% slide from Monday, BTC ended the day at $31,013.

While the broader crypto market found some much-needed support, TerraUSD and LUNA continued to free fall.

TerraUSD and LUNA Continue to Tumble as Investor Uncertainty Grows

This morning, UST tumbled to an all-time low of $0.1977 before finding support.

At the time of writing, LUNA was down by 80.8%, with LUNA falling to a morning low of $3.23.

Despite the market angst over UST, the Bitcoin Fear & Greed Index avoided another decline this morning.

Supported by bitcoin’s partial recovery on Tuesday, the Index climbed from 10/100 to 12/100. However, the Index remains deep in the “Extreme Fear” zone, reflecting investor anxiety over the threat of another sell-off.

For bitcoin and broader market crypto investors, several key drivers will be in focus today, which could test investor resilience.

Key Drivers to Dictate BTC and Crypto Market Sentiment Rise

The unrelenting UST and LUNA sell-off is likely to plague the broader crypto market. Immediate knock-on effects are evident in Anchor Protocol (ANC) and to a lesser extent, Avalanche (AVAX).

At the time of writing, ANC was down by 53.9%.

The UST meltdown has already garnered the attention of US Treasury Secretary Janet Yellen. Other lawmakers are likely to jump in as the broader market reversal gathers pace.

Without the appropriate regulatory framework in place to protect investors, a lack of control may lead to lawmaker ire in the coming days.

To add more fuel to the fire, US inflation figures for April are due out later today. We expect plenty of market sensitivity to the numbers. Softer numbers would be crypto market positive, though much will depend on lawmaker chatter and news updates on UST and LUNA.

Terra Lab CEO and co-founder Do Kwon has been silent on Twitter since an early Tuesday morning post saying,

“Getting close… Stay strong, lunatics.”