The catastrophic fall of Terra (LUNA), one of the top ten most valued cryptocurrencies, has created havoc on the investors, who dread becoming homeless as a result of the crypto mayhem. Within the previous 24 hours, its market valuation has collapsed from more than $40 billion to barely $500 million, a drop of more than 99%, leaving investors with nowhere to turn.
Why LUNA Crashed
The Terra meltdown occurs in the context of a larger crypto market decline, with bitcoin down more than 50% from its all-time high of about $69,000 (£56,677) in November 2021. Following the decline, top cryptocurrency exchange Binance momentarily prohibited all Terra network withdrawals, prohibiting even those who intended to sell from doing so.
However, issues with Terra’s dollar-pegged stablecoin, UST, have worsened LUNA’s collapse. The platform behind the beleaguered luna cryptocurrency announced Thursday afternoon that it has temporarily suspended its blockchain from prohibiting transactions after the token’s price dropped about 100% overnight, putting the network more vulnerable to an assault.
The Terra blockchain has officially halted at block 7607789.
Terra Validators have halted the network to come up with a plan to reconstitute it.
More updates to come.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 13, 2022
LUNA Price History
Fear & Greed Index: 10, Extreme Fear
All-time High: $119.18
24h change: 99.67%
Market Cap: $244,291,881
Circulation Supply: 6,530,342,020,076 LUNA
Total Supply: 6,907,376,873,996 LUNA
Recent Downfall Around Terra (LUNA)
Terra was formerly considered one of the top ten most valued cryptocurrencies. Binance, a cryptocurrency exchange, briefly halted Terra withdrawals.
“I realise the previous 72 hours have been tremendously difficult for all of you – know that I am committed to working with you to weather this crisis, and we will build our way out of this,” said Do Kwon, founder of Terraform Labs.
According to Terra, the “prevailing peg pressure on $UST from its present supply overhang is rendering substantial dilution of $LUNA”.
Terra has embraced UST as a stablecoin tied to an underlying asset, such as gold or the US dollar.
“The major challenge is removing bad debt from UST circulation at a rate fast enough for the system to restore the health of on-chain spreads,” the company tweeted.
It suggested that the leftover UST be burned in the communal pool.
“TFL will burn the remaining 371 million UST on the Ethereum cross-chain. TFL has lately invested 240 million $LUNA in guarding against network governance threats, “it was added
What’s the relation between LUNA and USDT
Technically, Terra is not a stablecoin in and of itself, but it is ‘pegged’ to one in UST. Because UST is linked to the value of the US dollar, its price – and hence Terra’s – was assumed to be far safer.
UST differs from standard stablecoins in a few ways. It is an “algorithmic stablecoin,” which means it has no actual reserves and instead uses a complex system of “smart contracts” to keep the value as close to $1 as possible.
UST, on the other hand, dissociated from the dollar earlier this week, with the once-value stablecoin’s plunging as low as $0.29.
Many investors believe the UST project will never recover; following its meltdown, investors rushed to liquidate their positions (in both Terra and LUNA) faster than the currency’s inbuilt stabilisers could kick in. The complex computational process that was designed to keep Terra trading at a fixed price failed. As a result, rendering both sides of the transaction nearly worthless.
Will Luna Recover or keep falling
After YouTube and music sensation KSI claimed he had lost millions due to the currency’s collapse, investors who accumulated Luna are questioning if the currency can ever recover. KSI tweeted, “What a week. I went to my hamsters funeral, performed in front of thousands of people at Wembley Arena with Anne Marie, my 3 million dollars worth of Luna is now worth a few $100. And it’s only Thursday.”
What a week. I went to my hamsters funeral, performed in front of thousands of people at Wembley Arena with Anne Marie, my 3 million dollars worth of Luna is now worth a few $100.
And it’s only Thursday.
— ksi (@KSI) May 12, 2022
Of course, the coin can return, but it comes at a time when the market is unclear. The cryptocurrency market is presently in a broad fall, with several currencies losing a quarter of their value as investors appear to be shifting to safer assets amid the current global crisis. Do Kwon, the founder of Terraform Labs, tweeted this week: “Close to unveiling a $UST recovery plan.” “Hold on tight.”
Kwon turned to Twitter to discuss his Luna recuperation strategy. He stated that he is presently stabilising the unprecedented crypto price drop by implementing a collateralised UST mechanism.
If you can’t afford to lose the money you’ve invested, don’t do it. It’s a chance, much like all sorts of stocks and shares, investing and putting money in gold. That is your option, but if you do it correctly, the investment should work for you; nevertheless, this does not guarantee that you will not lose money.
Will LUNA reach its all-time high of $22 in March 2021 or its all-time low of $3.90 in May 2021? The LUNA price chart has two major support and resistance levels. The first would be a 3.4 million times gain from the LUNA price low today of 0.00000112.