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Binance announced that it has withdrawn LUNA/USDT contracts from the exchange

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Major cryptocurrency exchange Binance announced that it has scrapped its Terra (LUNA) margined Tether (USDT) futures contracts following a more than 99% drop in the price of the token.

In a blog post today, Binance said it would be taking “precautionary measures” around its LUNA/USDT perpetual contracts. Intending to exclude the pair if the price drops below 0.005 USDT.

The announcement came after the exchange changed the leverage and margin levels for LUNA-linked contracts on Wednesday, with the maximum leverage set at eight times for positions below 50,000.

Binance Futures will perform an auto settlement on the USDT Margined LUNA contract and then delete the contract on May 12, 2022 at 3:30 pm

According to the exchange, it has experienced “slowness and congestion”, which has caused a large number of withdrawal transactions from the Terra network to show as pending.

Terra will burn $1.4 billion in UST and stake 240 million LUNA to “stop the bleeding”

In a thread of tweets, the Twitter account @terra_money went into more detail about Terraform Labs CEO Do Kwon’s UST rescue plan.

The thread reveals information about Proposition 1164, Do Kwon’s initial strategy for Terra on May 11. The proposal would better balance the Terra USD (UST) algorithmic stablecoin by expanding the pool of coins. The proposal has received 220,000 votes, more than 50%.

The tweet thread also explains that there is an “oversupply” of UST which explains the “dilution” of Terra (LUNA), or price depreciation. As a result, they must now burn more UST:

“The main hurdle is getting bad debt out of UST circulation at a rate fast enough for the system to restore health to on-chain spreads.”

Consequently, there are three emergency measures that must be applied, one of which focuses on burning more TSU.

Market in red: The crash of Bitcoin and the rest of the cryptos continues

As Bitcoin hit a new low, other cryptocurrencies also plunged, including Ethereum, Solana, and Ripple.

BTC prices fell below $27,000 in what has been a terrible month so far. Even the metrics suggest a downtrend for Bitcoin. Such situations often have a bearing on the entire crypto market. Investors should keep an eye on these patterns to get a complete picture of Bitcoin in the current market situation.

But this is not all. There is more pain for the Bitcoin community with daily trade flows indicating a worrying trend. As Glassnode tweeted, daily forex inflows reached a massive +801 million dollars. This is due to market uncertainty and apprehensions triggered by the whales’ FUD sentiment.

For his part, some experts have spoken out on the matter, Scott Melker, for example, host of The Wolf of All Streets podcast, said:

“Bitcoin has fallen along with global markets as traders and investors take risks on recession and inflation concerns. Bitcoin fell below 30K. The end was largely the result of the Luna Foundation Guard throwing Bitcoin on the market in a desperate attempt to fix the UST peg. This was an insult to injury on a bad day.”

Bill Miller Sold Some of His Bitcoin to Meet Margin Calls

Instead, Miller Value Partners president Bill Miller told CNBC that he sold some of his Bitcoin holdings to raise cash to meet margin calls.

“The short answer is no,” the billionaire investor said when asked if he had sold any of his Bitcoin. Expanding on that answer, Miller said he downloaded some “stuff” to satisfy margin calls. Likewise, he pointed out that when times get tough, one wants to sell very liquid assets… “Bitcoin fits the bill.”

A margin call occurs when the value of an investor’s margin account falls below the amount required by the broker.

“I’ve been through at least three 80% plus dips,” recalled Miller, who first bought the cryptocurrency when it was in the $200-$300 range. “I have it as an insurance policy against financial catastrophe… I have yet to hear a good argument why someone shouldn’t put at least 1% of their liquid net worth in Bitcoin.”

As for his short-term outlook on Bitcoin, Miller, a former chief investment officer at Legg Mason Capital Management, said he has “no idea.” While he would be “upset” if the price of Bitcoin fell by half from here, he would not be surprised.

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