Terra’s stablecoin has lost its peg to the dollar and is trading around $0.05 at the moment.
Frank Chaparro, editor at The Block, described the ongoing UST crisis as one of the most destructive wealth events in the history of the cryptocurrency market.
He made this comment during a recent interview with CNBC. When asked about UST’s de-pegging, Chaparro said:
“We did see a bit of de-pegging in Tether, but I talked with the team and it seems like they’re managing. I heard there is pressure to get out of stablecoins right now because people are worried about the risks illustrated by UST, which really can’t be understated. This event is probably the most destructive wealth event in the history of crypto, with probably around $50 billion wiped out.”
Chaparro also said investors are increasingly concerned about other stablecoins. He told CNBC:
“It’s not surprising that investors are worried about Tether and other stablecoins at the moment. But speaking more broadly, I talked to Tether and they said they hold a large amount of short-term U.S. Treasury bills, so it would be relatively straightforward for them to honor several billion dollars in redemptions.”
By contrast, Chaparro noted that UST is not in a similar position. The Terra project is reportedly trying to secure large capital infusions from whales, aiming for at least a billion dollars, but has been struggling to attract that support. He added:
“At this point, with UST down as much as it is and LUNA, Terra’s native token, collapsing, the outlook looks bleak. That isn’t to say recovery is impossible—it’s only a question of if and when it might happen.”
LUNA, the native token of the Terra ecosystem, has plunged more than 98% in recent days and is trading around $0.06087 per coin.
The collapse has triggered widespread concern across the crypto market, prompting investors to reassess counterparty and stablecoin risks. Analysts and commentators are now watching for any signs of coordinated support or regulatory intervention, but uncertainty remains high as traders and institutions weigh their exposure.
Market participants note that the extent of losses, forced liquidations, and contagion effects will depend on how quickly the Terra team or outside investors can stabilize UST and whether other stablecoins face renewed redemption pressure. Until clarity emerges, volatility and risk aversion may persist among crypto holders and broader financial markets.