GB Market Commentary 21/12/2021
by Marcus Sotiriou
Bitcoin rallied this morning reaching $49k as it has broken out of a bullish falling wedge pattern (see below). As mentioned in yesterday’s market note, a rally for crypto was expected when US stocks bounced, after an aggressive sell off for the S&P 500. A key level to watch out for over the coming days or weeks is $53k – reclaiming this level would signal an end to the downtrend.
The UST stablecoin (on the Terra blockchain) has become the biggest decentralised stablecoin by market cap, overtaking the Ethereum based Dai stablecoin. UST has grown from a market capitalisation of $182 million at the start of 2021, to more than $9 billion this month, showing how fast the Terra ecosystem has grown after just a year of development. The expansion of UST has propelled the LUNA token to reach over $80 from just $0.64 in January this year – this is because whenever UST is minted (creation of new tokens to meet the demand) LUNA is burned. This decrease in supply results in an increase in price if demand stays constant. UST is used for lucrative interest earnings, to power DApps (decentralised apps) on the Terra platform, as well as a method of payment. UST is now the fourth biggest stablecoin by market cap after USDT, USDC and BUSD which are all centralised stablecoins. As the Terra ecosystem grows I expect UST to be a closer competitor to the USDT stablecoin, hence simultaneously increasing the value of LUNA.