The $40 billion algorithmic stablecoin death spiral
Fear & Greed
Extreme Fear
Bitcoin Price
$27,000
30-Day Change
-35%
What Happened
The Terra/LUNA collapse in May 2022 was a watershed moment for crypto markets. The algorithmic stablecoin UST lost its dollar peg, triggering a death spiral that destroyed $40 billion in value within days. LUNA went from $80 to near-zero, UST depegged permanently, and the contagion spread to Three Arrows Capital, Celsius, Voyager, and eventually FTX. The event fundamentally changed how media and regulators viewed stablecoins, accelerating regulatory conversations globally and killing the algorithmic stablecoin narrative almost entirely.
Key Narratives