Shifts in LUNA have left cryptocurrency investors in shock as the token haemorrhaged value in an unexpected market bust-up. As it rippled across the market, other currencies were dragged down alongside it. Investors who traded their life savings to “buy the dip” not long ago will have been left in financial ruin and questioning what happened.
What happened to Terra Luna?
Terra Luna (UST) ranked amongst the 10 most valuable cryptocurrencies until this week, with each token worth roughly $85 (£69.69) on May 5.
On May 11, it was already in a precarious position, having dropped down to $17.38 (£14.25) in the early hours.
Just a day later, on May 12, the coin forfeited 97.54 percent of its value, dropping down to its current value of $0.02863 (£0.023).
The sudden and dramatic fall from grace ravaged the coin’s market cap, taking it from more than $40 billion (£32.7 billion) to just $500 million (£409 million).
Some investors said they had lost up to $450,000 (£368,000), spelling disaster for their homes and savings.
UST decoupled from the dollar earlier this week, and the downturn followed not long after.
Do Kwon, the founder of Terra creators Terraform Labs, addressed the situation via social media today.
He told investors that he was “close to announcing a recovery plan” and asked his followers to “hang tight”.
In a following Twitter thread, he praised the Terra ecosystem, and vowed that the currency’s “return to form” would be a “sight to behold”.
The activity in Terra was felt across the market, as other currencies are also trending down at present.
But cryptocurrency experts have said the “extreme volatility” of the last 24 hours was a result of technological nascence.
Analysts from Bitfinex Market Analysis said the trouble showed the strength of other, more established coins.
They said: “The capitulation of Terra Luna and the issues that we see with Terra’s dollar-pegged algorithmic stablecoin UST are part of the growing pains of a space where innovation charts a course at a frenetic pace.
“The real story of the day is the relatively strong performance of the three leading cryptocurrencies, bitcoin, Ethereum and Tether tokens (USDt).
“The trinity stands strong, demonstrating the strength and resilience of a digital token ecosystem that will define this entire decade.”
Can Terra Luna recover?
LUNA’s stewards at the Luna Foundation Guard are aiming to resurrect UST.
They have launched a campaign aiming to raise $1 billion, which they believe could help accomplish this.
However, as with any cryptocurrency, LUNA is highly volatile, and even if the coin did recover, the market could easily pull it down again.
The information in this article does not equate to financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.
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