There are more than enough reasons for Bitcoin to collapse lately. This was revealed today thanks to a report by Luna Foundation Guard, who represent Terra. It is the company that is responsible for what is happening to the LUNA and UST coins that experienced a collapse last week.

However, Terra representatives tried to save the UST situation. To do that, they were buying the coin in exchange for crypto in their own reserves, thus trying to stabilize its exchange rate, which should be equal to $1. According to the company’s statements, as of the seventh of May 2022, it had 80,394 BTC, 39,914 BNB, 26,281,671 USDT, 23,555,590 USDC, 1,973,554 AVAX, 697,344 UST and 1,691,261 LUNA.

Most of these coins went to UST, but even that did not save the cryptocurrency from collapse. Today, Stablecoin is valued at 8 cents.

If the company’s statements are to be believed, they have sold off almost all of their reserves in recent days. On May 7, the volume of cryptocurrencies held by LFG was the equivalent of $3.1 billion, and today it is 87 million. Accordingly, $3 billion worth of coins were dumped on the market, most of which came from bitcoins.

Terra reserves as of May 7 and May 16, 2022

That is, the market experienced a drain of 80,000 bitcoins – which is a serious amount. As such, it’s not surprising that the niche has collapsed so visibly. Although as analysts say, the market reaction has been quite strong.

Why Bitcoin is set to rise

Miller first bought BTC seven years ago, when the coin was trading around $200. However, most of the bitcoin in his portfolio was accumulated by the investor last summer, when Bitcoin was falling to $30,000. In a recent interview, Miller reiterated his stance on the cryptocurrency market and said he has no negative feelings about Bitcoin’s recent collapse.

Here’s the celebrity’s rejoinder, in which he talks about his own attitude towards what’s happening. The quote is cited by CryptoPotato.

I’ve experienced at least three cryptocurrency drops of 80 percent. I own Bitcoin as an insurance policy against financial disaster. I have yet to hear a compelling argument as to why anyone should not invest at least 1 per cent of their liquid capital in Bitcoin.

Note that 1 percent of an investment portfolio in BTC is a fairly conservative value. For example, in March 2022, Canadian businessman and showman Kevin O'Leary admitted that he now allocates 20 percent of his portfolio to crypto. The year before that, the figure was only 3 percent, which means that the entrepreneur has multiplied his investments in digital assets. You can read more about this story in a separate article.

Billionaire Bill Miller

In addition to Bitcoin, one of the “pillars of the crypto-industry” is considered to be the Tether (USDT) stabelcoin. Paolo Ardoino, technical director of USDT’s issuing company, said the day before that the amount of commercial paper backing stablcoin has almost halved. He was quoted by Decrypt.

Over the past six months, Tether has reduced the volume of commercial paper in backing by 50 percent. Everything that has been cut from commercial paper has been invested in US Treasury bonds. In the next few weeks we will have a new attestation, which will show that the volume of these commercial paper is declining further.

Tether’s reserve structure

Commercial paper is a type of security issued by large corporations to pay for short-term debt of the inventory or payroll type. The reduction of this type of asset in backing Stablecoin means that the company wants to make it more stable and independent of external markets. This is particularly relevant against the backdrop of the UST token tragedy that erupted last week.

That said, as Paolo Ardoino stated last week, such a collapse of the Tether USDT coin would not suffer, as it is not an algorithmic stackcoin. In other words, it works because of the coin’s provision of other assets, not because of a particular algorithm. You can read more about the logical explanation of this feature in a separate article.

Tether USDT logo


We believe that Bitcoin's fundamentals are indeed sufficient to give full credence to the cryptocurrency. The only question here is how long a particular investor is willing to keep BTC and other coins. If the time frame is a few years, then dealing with crypto seems both justified and easy enough.