We know algorithmic stablecoins are new and risky. UST is backed by Luna, and the foundation behind Luna bought so much Bitcoin I believe they're now amongst the top 10 holders.
If UST loses its peg against the dollar and Luna isn't enough to bring it back up, the foundation will have to sell some of its BTC to keep the peg, which applies sell pressure on BTC and brings it down along with the whole crypto market.
Is this what's happening now already?
I was impressed by what they've been doing a few months ago about a continuous purchase of bitcoin. Now, we're seeing the expense of it and you're right with what you've said. As they try to maintain it through possible sell-offs as their stable coin is about to downfall, we actually are seeing its fall, and if this continues and isn't able to maintain its position as stable. Possibly that we're going to see the domino effect of it but, this isn't just all about UST and Luna. But this is an overall experience of the world market which still has an active conflict of Russia and Ukraine.