Why is USTC Price Rising This Week?

The Terra Luna ecosystem was almost forgotten after experiencing a historical crash in the crypto industry. Despite the reasons behind the collapse, the aftermath effects were huge. The Terra Luna crash wiped out billions of dollars from the market, along with the belief in algorithmic stablecoins.

Terra Luna initial stablecoin, Terra Classic USD, aka USTC is making headlines this week for its significant price surge. It left investors wondering what could be the reasons for USTC’s price surge after one and half years from losing its USD peg. Keep reading to know the reasons behind USTC’s price surge here.

About USTC in Brief

USTC, which was initially known as UST, is one of the pioneering algorithmic stablecoins in crypto. Much like some of the top stablecoins, the USTC price was also pegged to the world leading fiat currency US dollar.

When its sister cryptocurrency, LUNA, reached an all-time high of $119 in April 2022, UST became the third-largest stablecoin after USDC and USDT. While LUNA is the native cryptocurrency of Terra Luna blockchain, UST is its native stablecoin. Even though there were slight changes in the price for brief periods, UST never failed to maintain its US dollar peg until the Terra Luna collapse.

The Fall of USTC

Just weeks after the LUNA token reached its all-time high, USTC lost its US dollar peg and dropped to $0.985 in May 2022. Several speculations suggested that a single swap worth $85 million from USTC to USDT caused the depeg. One thing led to another and the Terra Luna crashed in the following weeks.

Terra blockchain’s largest DeFi protocol Anchor lost more than $5 billion worth of deposits in a single day. Adding to that, its native token ANC price fell by 35%, which resulted in USTC’s depeg for the second time. This time the price of USTC dropped to $0.35.

The domino’s effect continued to happen and the LUNA crypto price fell by 96% to 10 cents on May 12, 2022. Popular crypto exchanges like Binance and OKX delisted UST tokens, its price fall continued till the end June, 2022 and went to as low as $0.008.

This Terra Luna and UST debacle created shockwaves in the crypto industry. And, people started questioning the viability of algorithmic stablecoins.

Why is USTC Price Rising This Week?

At the time of writing, USTC price is hovering around $0.05294 recording weekly gains of over 294%. Furthermore, USTC recorded a 132.20% growth so far in 2023, with this substantial price surge.

Mint Cash Announcement

The USTC price rally slightly began after an announcement from Mint Cash project head on November 25. Mint Cash project has a similar vision as Terra Classic community and it announced itself as a spiritual successor of USTC.

When one of its project heads posted on X that they will airdrop USTC tokens that are valued at $1 USD, investors started to accumulate USTC tokens. This resulted in an initial price rise in USTC last week.

Strategic Investment by Terra Classic Labs

USTC price skyrocketed with a 300% increase on of November 27, 2023. But, why is the USTC price rising this week? Let’s decode! It all started with a post from an X user named “Trader QT” who happened to be an Official Partner of Terra Classic Labs.

He posted that a total of 25.6 million USTC which is worth around $500,000 was acquired by Terra Classic Labs. The acquisition happened as part of Terra Luna Classic Labs Treasury Reserve Policy. This acquisition is the major reason behind USTC’s ongoing price rally.

Binance’s USTC Perpetual Contracts

Adding to the ongoing price surge, leading crypto exchange Binance announced the launch of USTC perpetual contracts with 50x leverage. The funding fee will be settled for every four hours in the USDT asset. Users can trade USTCUSDT perpetual contracts under the Multi-Asset Mode. The news increased the ongoing hype in the USTC community, leading to further increase its price.

LUNC Token Burn

However, this is not the first time its price has increased after the collapse. Both LUNC and USTC witnessed a price rise around a month back in October. They recorded a 15% and 12% increase in a week respectively when 800 million USTC was removed from its total supply.

Binance burned another 4 billion LUNC tokens on Dec 1, 2023 which caused a another price rise of 14% in LUNC price at the time of writing. Speculators believe that the Binance’s recent LUNC token burn will cause a price rise in USTC.

What Happened to Luna Classic (LUNC)?

LUNC and USTC are connected to each other by a predefined algorithm. As a result, the price changes of one will definitely affect the other. So, let us see what is happening with LUNC amidst the price rally of USTC.

Terra Luna Classic price is trading at around $0.0001366 as of December 1, 2023. As the positive market sentiment of USTC is passing on to its sister token, LUNC recorded a significant price increase in this week. It recorded a weekly gains of 82.26% and monthly gains of 108.30%. LUNC price also increased when the Terra Luna Classic community passed a proposal for the V2.3.0 upgrade to its network earlier this month.

Conclusion

We hope that this article addresses all your concerns regarding why the USTC price is rising today. Even though the USTC’s price has increased significantly, there is still a long journey ahead to regain its US dollar peg.

On another note, the ongoing price rallies of USTC and LUNC are a testament to the commitment of Terra Luna developers. Their relentless hard work highlights the efforts of LUNC and USTC communities to revive the Terra ecosystem. Do you think Terra Luna can regain its spot in the top 10 cryptocurrencies in 2024?

FAQs

How much USTC crypto is in supply?

The circulating supply of USTC is 8.98 billion as of November, 2023.

How much is 1 USTC in dollars? 

The value of 1 USTC is supposed to be equal to $1 dollar, being a stablecoin. But, it is worth $0.0533 as of December, 2023.