The token of smart contract platform Avalanche AVAX/USD is now paying the price of enjoying being one of the assets locked as collateral to maintain the peg on Terra‘s LUNA/USD native algorithmic stablecoin TerraUSD UST/USD. Just today, the token’s price fell from its 24-hours high of $47.20 down to under $28 — a fall of nearly 41% in mere hours.
What Happened: Earlier on Wednesday, Terra’s price fell by more than 97% as UST lost its peg to the dollar and Luna Foundation Guard — the non-profit backed by TerraLabs tasked with protecting UST’s peg — emptied its cryptocurrency reserves in a futile attempt to stop the freefall, as reported by Cointelegraph.
According to official data, those reserves are now made up of 68.4% AVAX and fuel fears that — with its pre-dump 24-hours trading volume being under $2 billion — a major dump is incoming for the token. Luna Foundation Guard’s reserves also fell from nearly $4 billion at the beginning of the month down to $103 million as of press time.
AVAX Price Action: As of press time, AVAX is trading at $34.65 after recovering 23% from its low of $27.96 reported earlier today.