Terra Luna is down -99.99% — and the question is WHY?
Plenty of theories have circulated about the cause of LUNA’s demise and most of the specific answers seem to be merely speculation.. however many people saw this coming. The question is how? I suggest 3 reasons you could’ve predicted TERRA LUNA / UST was going to fall apart.
Although Terra has crashed it is still pumping
After undergoing a massive crash that shocked the cryptocurrency community, the Terra (LUNA) token is witnessing a pumping activity as a section of investors bet on the coin’s resurgence.
LUNA is a token developed alongside the algorithmic stablecoin TerraUSD (UST) by Terraform Labs to keep its peg of $1. Between May 9 and May 14, UST lost its value by 85% dropping from $1 to $0.15.
Luna crashed due to its link to UST which decoupled from the dollar earlier this week to collapse below one cent. The price of LUNA lost its value by 99% plunging from $62 on May 9 to less than a cent by May 14.
By press time, LUNA was up 364% in the last 24 hours trading at $0.0004, according to Coingecko.com. At some point, the token had gained 2,000% despite the general cryptocurrency market trading in a volatile state.
It can be assumed that the pump activity is due to difficulties in shorting LUNA considering that margin trading was suspended by major exchanges with no signs of relisting.
The scenario creates a perfect environment for the token to surge in value with short positions borrowing large amounts with the intention of short selling it at a given price.
Terra’s founder issues apology
The pump has also coincided with Terra’s founder Do Kwon issuing an apology to investors and the general LUNA community.
Through his Twitter account, Kwon stated that he had not benefited from the crash, unlike other crypto scams where founders make huge profits before the assets lose value.
In response to the crash, the Terraform Lab has resolved to restart the blockchain with some investors hoping to make gains from the crash.
Some crypto observers and investors are now likening Terra to meme coins like Shiba Inu which recorded a significant surge in value in 2021. Due to the panic from Terra’s collapse, there are fears that cryptocurrencies like SHIB might undergo the same fate due to a lack of real use cases and dominance by whales.
In the wake of Terra’s crash, it has also emerged that Kwon has a history of failed stablecoins including Basis Cash that was to be pegged on the U.S. dollar. However, the stablecoin failed to make it after trading below $1.
Ironically, eight days before the LUNA crash, Kwon in an interview with American-Canadian chess player Alexandra Botez projected that 95% of companies entering the crypto space will die while noting that “there’s also entertainment in watching companies die too”.
Generally, LUNA’s collapse has impacted different classes of investors who saw their money wiped out in hours. As reported by Finbold, popular British YouTuber KSI, also known as JJ Olatunji’s $2.8 million LUNA investment was wiped out to less than $1,000.
Coinbase delists Terra tokens
Following the crash, exchanges are now delisting the Terra ecosystem assets with Coinbase emerging as the latest entity. In a blog post, Coinbase stated that it will suspend trading in UST and WLUNA on May 27, 2022. The suspension will affect Coinbase, Coinbase Pro, and Coinbase Exchange.
The disintegration of Terra’s ecosystem has also resulted in safety concerns involving Kwon’s family. Reports indicate that Kwon’s wife sought police protection after an unidentified assailant broke into her apartment asking for Kwon. She is currently under emergency police protection.
Here’s how to potentially protect yourself from suffering a Luna type crash in future
There are traps everywhere in crypto. This can be small like paying too much in fees or as large as losing your entire account. The good news is these are totally avoidable.
Crypto is getting more and more popular, but it’s largely unregulated
For example, with stocks… it’s very illegal to promote them without a disclosure… with crypto there’s a bit more of a grey area.
But no matter who tells you to buy what, always do your own research.
PLUS doing your own research gives you confidence in your investments because you know why you’re buying, not just because someone told you to.
DISCLAIMER: Please be advised that nothing in this video shall be construed to be financial, legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor. All personal opinion is intended for general information purposes only
Source Finbold
Cocky doesn’t do failure well. Do Kwon said 95% of coins are going to die but there’s also entertainment in watching them die too….And then he became the entertainment!
