A selloff in a cryptocurrency that was supposed to be pegged to $1 accelerated Wednesday, briefly sending its price to less than a quarter of that value.
TerraUSD traded as low as 23 cents Wednesday, according to data from CoinDesk. As of 8:53 a.m. ET, it had rebounded partially to about 30 cents in volatile trading.
A stablecoin, this breed of cryptocurrencies had gained favor among traders for being the one part of the crypto universe that was known for its stability. While the most popular stablecoins maintain their levels with assets that include dollar-denominated debt and cash, TerraUSD is what is known as an algorithmic stablecoin, which relies on financial engineering to maintain its link to the dollar.