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?
Luna ponzinomics will surely fuel the bear for more downward direction. This is the repercussions of hyping the market with huge APY while can't sustain in the long run. Of course everybody that staking on high APY will easily take profit when the market turns south just like what happening right now. I wonder if LUNA foundation will do a buy back to cover the value loss on there stablecoin or will be happy on the money they bag from traders that purchase UST in exchange for temporary high APY.