Terra LUNA Crashes 98%: Here's is Everything you need to know

PUBLISHED May 11, 2022, 8:08:52 PM       

img
imgTobi Amure

Terra Luna has crashed to about 98% in recent events. The Coin's market capitalization has dropped from $4 billion to $2 billion, and the market price has fallen to under $1 in the last twenty-four hours.

This crash has brought about a lot of backlash from the Terra LUNA community.

In this article, we will be giving insights into everything about the crash.

What is the Terra LUNA and UST Crash all about?

In the early hours of Wednesday, the value of LUNA plummeted as Terraform Labs founder Do Kwon announced a plan to salvage its sister token, the stablecoin TerraUSD (UST).

LUNA has lost around $10 billion in the last 24 hours. Its price has dropped 98 percent, from $32 to below $1 a coin, with the fluctuating price minute by minute. UST has risen more than a quarter to 64 cents a coin after plunging to 30 cents.

On Wednesday, Kwon proposed destroying a "billion in UST" while "substantially" diluting LUNA's price on Twitter.

The move comes after UST and LUNA have lost tens of billions of dollars in value in the last week and as investors and analysts struggle to figure out the potential extinction of both coins means for the crypto market.

According to Kwon's tweets, the recovery proposal — which appears to be on the verge of being approved by the Terra community — would allow investors to trade UST for LUNA, significantly increasing LUNA's price pressure to bring UST back to its $1 peg.

Recognizing the implications for investors, Kwon stated, "we will continue to investigate various strategies to bring in additional external money to the ecosystem" and change UST's peg mechanism "to be collateralized."

Most stablecoins tie their value to another asset, most commonly the US dollar, to stay as feasible to that asset's value. The purpose is to provide pricing stability for commercial payments and a safe harbor for investors.

On the other hand, UST is an algorithmic stablecoin that relies on market dynamics to manage the asset peg by tying UST to its sister coin, LUNA. However, the method appears to have increased the stablecoin's volatility.

At presstime, UST is trading at over 64 cents per coin, down 30% in the last day after breaking its critical $1 peg over the weekend, while Terra's LUNA token is up 61 percent to $1.15 after dipping to $0.45 at 9 a.m. New York time Wednesday.

Treasury Secretary Janet Yellen described UST as a "run" during a Senate Banking Committee meeting Wednesday, highlighting why the US needs to implement stablecoin regulation now more than ever.

"I think that simply highlights that this is a rapidly developing product with financial stability risks, and we need an appropriate structure," Yellen said.

"We're witnessing $18 billion in wealth go before our eyes, and people are losing money," Todd Phillips, head of financial regulation and corporate governance at the Center for American Progress, added.

Though many observers blame the stablecoin's design and capacity for weathering turbulent markets, Teng also mentioned another "trigger" for the stablecoin "de-peg" last weekend.

image description

Investors Backlash

It was gathered that many investors who bought $LUNA at a very low price regretted that they didn't sell off when it was at its all-time high due to assumptions that it would go higher.

A member of a LUNA reddit forum had this to say--“I lost over $450,000, I cannot pay the bank,” Another user member of the Terra forum wrote.“I will lose my home soon. I’ll become homeless. Suicide is the only way out for me.”

Read Also: ApeCoin's Otherside: Everything you need to know

Final Note

With the crypto market being in the bearish season, investors are wary of market manipulations and would try to save their money by pulling out unprofitable projects. Algorithmic stablecoins are in their early stages; this run with UST and LUNA seems like an experiment and people were able to exploit its weaknesses; the creators of LUNA would need to dig deep to save the project.



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads

Investing Mistakes Beginning Investors Make

Image

Congratulations on making the step to find out about investing in the stock market. A bigger congratulations if you’ve started investing. As with most new things that you decide to try, investing has a learning curve. A beginner can make mistakes that will cost him or her money and time. However, learning about common mistakes and how to avoid them can save time, money, and undue stress.

Is Astra Space Inc. (ASTR) a Buy Right Now?

Image

Astra Space Inc. is a space stock that could potentially be a big player as the space industry matures. But with the market falling, is it a good stock to consider right now?

Why Should New Investors Join BetterInvesting?

Image

Starting to invest early is important, but starting with BetterInvesting may help you to double your portfolio every 5 years.

Building a Low Base

Image

Market Commentary

Explaining Economic Indicators

Image

Knowing These Indicators Will Empower You As An Investor!

Market Musings - 5-3-2022 - FED Watch

Image

George Crawford gives his Market Musings for this 1st week of May 2022

Recession-Proof Investments

Image

Know Which Industries Always Remain in Demand

Creating Financial Goals

Image

A plan to alleviate and vanquish debt and save for retirement are two of the top financial goals for adults. The information contained here can help set goals, budget, and save.

Always Be Investing (Don't Let the News Scare You)

Image

You Can't "Buy Low, Sell High" if You Sell Into a Recession

Lockheed Martin is a Great Dividend and Space Stock

Image

Lockheed Martin has a dividend yield of 2.5% as of Q2 2022. Let's discuss how LMT has kept a healthy dividend as a leader in space and military technologies.

StockBossUp 'Dark Mode' is looking Fly!

Image

Love how these charts and user content are popping out now on the dark theme. More improvements are coming soon!

ApeCoin's Otherside: Everything you need to know

Image

On the 19th of March, the creators of ApeCoin, Yuga Labs released a teaser trailer of their Metaverse on Twitter–Otherside.

Metamask: Here is Everything you need to know

Image

This guide will explain what Metamask is, how to set up a Metamask account and compare Metamask and Trustwallet.

Biggest Cryptocurrency Heists Ever

Image

This article will explore the Biggest Cryptocurrency Heists recorded ever in history. Let's begin…

Market Musing 4-26-2022, Big Tech Earnings, Prepping for a Bearish Market

Image

Market musings from George Crawford on Big Tech Earnings and Prepping for a Bearish Market

Where to Start with Personal Finance

Image

Dedication to managing money and understanding personal finance begins with the proper mentality.

Is Roblox Still a Buy in Q2 2022?

Image

Is Roblox (RBLX) still a buy, a hold, or a sell? Let's take a look at Q1 2022 to see what's changed for Roblox.

Portfolio Diversification Strategy for Beginners

Image

When you build a diversified portfolio, you are managing the risk of your investments. A diversified portfolio can take bigger risks by mixing in safer investments.