When China outlawed cryptocurrency trading, many were left stunned, rather shocked, as they never believed that a country so committed and eager to establish an alternate currency of US Dollars could take such a drastic step. However, the people of China are still interested in the market’s volatility. Due to the love and confidence in cryptocurrency, many people have ended up discovering various workarounds to continue trading all kinds of tokens.
After a rough weekend, Bitcoin’s price tanked more than half from its peak of $69,000 in November 2021. The price of Bitcoin has crashed to the $30,000 mark now. The crash occurs in tandem with de-pegging of algorithmic stablecoin TerraUSD (UST).
Stablecoins are digital currencies that are tied to a stable reserve asset such as the US dollar or gold. The whole purpose behind such an arrangement is to reduce volatility in the crypto market which is by far the major concern of millions of traders who have decided to stay away from it. Besides, it also offers the advantages of digital currency like fast transactions.
An algorithmic stablecoin uses algorithms to maintain a price that is similar to central banking rather than having actual cash in reserve. UST is created by “burning” its sister token Luna using smart contracts. These are lines of code that are embedded into a blockchain and used to execute decisions automatically.
Terraform Labs, which is behind UST, cryptocurrency Luna and Luna Foundation Guard emptied its treasury account of all its bitcoin on Monday. This amounts to 42,530 bitcoin amounting to $1.3 billion. The price of UST fell to $0.95.
The hashtag #luna rose to the list of top ten keywords on Weibo on the same day. Weibo is China’s answer to Twitter and is widely considered a beacon for public discussion in China. As of Monday evening, nearly 15 million people had viewed posts tagged #luna.
Luna is now a mature entity. Although LFG [Luna Foundation Guard] had announced a loan of $1.5 billion to revive UST, I think Luna is overdue. Even if the rescue is successful, it could continue to struggle with Parkinson’s disease, trembling, and possibly even death. No one would be able to intervene in a situation like this trust crisis, wrote one Weibo user who has 200,000 followers. Others shared photos of the losses they suffered from Luna’s crash. The price of Luna dropped by more than half within 24 hours.
It’s nearly impossible to quantify how many Chinese people are trading crypto. However, close to 10% of web traffic that lands on OKX, which consistently sits atop the 15 exchanges worldwide, comes from China according to web analytics company similarWeb.
