TerraClassicUSD (USTC) Rockets 278% Over Past 24 Hours. Should You Buy?

Terra's collapsed stablecoin has been depegged from the U.S. dollar since May 9, and is currently priced at nearly $0.04, up from a penny.

Crypto investors in the U.S. saw a stunning sight this morning across cryptocurrency exchanges as the reimaged stablecoin, TerraClassicUSD (USTC), shot up more than 278% with the past 24-hour window, from a low of $0.0104 to as high as $0.0431 as reported on the CoinMarketCap website.

The USTC token has been rebranded and relaunched from TerraUSD (UST) as USTC by Terraform Labs following its epic meltdown on May 9, when the "un-stablecoin" lost its target valuation peg to the U.S. dollar. Since then, the asset has been down more than 95%, struggling to stay above a nickel in value.

What happened to Terra's stablecoin?

As background, traditional stablecoins have direct 1:1 backing of hard assets such as fiat currency, gold, bonds, or commodities. An algorithmic stablecoin -- such as USTC's former iteration -- relies on software to regulate the circulating supply of the stablecoin up or down to automatically match the token's value to its target asset -- in this instance, the U.S. dollar for USTC coders.

However, such automated price and volume shifting creates arbitrage opportunities for savvy investors using their own automated trading software to instantly buy the digital asset at a lower price on one exchange and sell it for higher prices on other exchanges. But wide swings can occur, and liquidity issues can surface quickly. Such volatility can cause the stablecoin to spiral down in price, even affecting established stablecoins such as Bitcoin, which occurred as a result of the collapse of both Terra (LUNA) and Terra's botched algorithmic token last month.

Should you buy TerraClassicUSD (USTC)?

This is not financial advice, and every investor should conduct their own investment research and only use a funding amount that they can afford to lose. Given that there's no news, reasonable rationale, or development warranting the triple-digit spike for USTC, it's my opinion that average investors should avoid this project. It seems to be market manipulation or arbitrage players that are artificially jerking around the price, and that's not the type of environment an individual investor wants to enter.