Terra is now freefalling with its two major tokens.

UST, a “stablecoin” that is meant to hold a $1 perg, fell more than 60% Wednesday after falling by over 60% 24 hours before. The price was at only 35 cents as of 4 AM. ET according to CoinGecko data.

More than 80% of sister token lunas jumped to $5.

They were followed by other cryptocurrencies that tumbled with them. bitcoinSinking to $30,321 at 5% etherFalling to $2,286 by 4%

Stablecoins are akin to bank accounts for the crypto economy, offering a sound store of value to avoid the kind of volatility cryptocurrencies like bitcoin have become notorious for — in theory, at least.

UST is the third largest stablecoin in the world. It uses a complicated system of burning and minting tokens to stabilize and adjust prices. Recent sell-offs in cryptocurrency have caused further panic and led to a collapse in its price.

Do Kwon is the creator of this coin. billions of dollars’ worth of bitcoinThrough his Luna Foundation Guard Fund to help UST during times of crisis. Now, the fear is that Luna Foundation Guard may dump these bitcoins onto market, leading to an even larger sell-off.

Bitcoin fell below $30,000 on Tuesday. This is its lowest point since July 2021. Now, the world’s largest digital currency is hovering just above this level. The cryptocurrency has dropped 56% from its November record of $69,000.

David Moreno Darocas of CryptoCompare is a researcher who stated that this situation highlights the fragility of algorithmic stabilizecoins, such as UST.

“UST has become an integral piece and controversial part of the crypto environment,” he stated.

Although the phenomenon is new, it’s not yet widespread. UST is a significant player in crypto-economy, having a circulating supply close to 17 billion tokens.

Investors will be closely monitoring how Luna Foundation Guard reacts to its unstable stablecoin. Kwon stated Tuesday that he is “close to announcing a plan for recovery” for UST. He tweeted, “Hang tight!”