Algorithmic stablecoins, like their more “traditional” counterparts, are supposed to provide calm in the chaos of crypto. Instead, as investors in one such token are rapidly finding out, they can serve as lightning rods for volatility.
Rather than trading at $1, as designed, the TerraUSD coin, or UST, slipped over the weekend to around 99 cents. By Monday evening in New York, it had plunged to 60 cents, obliterating its previous low of 92 cents in May 2021. It clawed back losses on Tuesday and is fluctuating between around 90 cents and $1 -- a sign of trouble.