The crypto economy has been in turmoil over the past few days as billions have left the market in search of safety. The problems with LUNA caused a significant sell-off as Terra’s native digital asset dropped in value by 97% against the U.S. dollar in 24 hours. Terrausd fell 67% below parity at $1 and was trading at a low of $0.299 per unit at 9:00 a.m. (Eastern Time).
Terra’s native token LUNA loses 97% and UST loses 67% in 24 hours
The Terra blockchain ecosystem has been hit by events over the past few days as the algorithmic stable token network terrausd (UST) began to lose its peg to the U.S. dollar. Project founder Do Kwon and the Luna Foundation Guard (LFG) also explained that the team lent $1.5 billion in bitcoins (BTC) and terrausd (UST) to help protect the peg. The effort proved fruitless, and UST dropped to $0.66 per coin, but then, for most of the day on Tuesday, UST managed to climb back above the $0.90 area.
On Tuesday evening, UST started falling again, and its decline continued to the most recent lows at $0.299 per unit. LUNA’s native token suffered even more than UST, as it lost 97% of its value in the last 24 hours. Within 24 hours, the price of LUNA ranged from $33.93 per unit to $0.810 per coin. Moreover, after Do Kwon said to hang in there and a plan was on the way, the Terra co-founder addressed the public on Twitter.
“First of all, the only way forward will be to absorb the supply of stabelcoins that want out before UST can start re-registering,” Kwon said. “There’s no avoiding that. We are proposing several remedies to help the pegging mechanism absorb the offer. First, we support Community Proposition 1164 to increase the base pool from 50M to 100M SDR *) Reduce PoolRecoveryBlock from 36 to 18. This would increase mining capacity from $293M to ~$1200M,” Terra co-founder added.
Kwon also said that Terra could recover from the collapse, and noted that the project isn’t going anywhere. “Terra’s return to form will be a spectacle,” Kwon wrote on Twitter. The Terra founder added:
We’re here to stay. And we’re going to keep making noise.
‘Worse than bitconnect’
Of course, with many people losing money and some of them lost everything, many people criticized the Terra founder’s response. Podcast host Peter McCormack asked Kwon “What % probability do you give that the same thing won’t happen again.” Bitcoin supporter Hasu said that the UST event was “worse than Bitconnect.” “At least Bitconnect wasn’t masquerading as Stablecoin,” Hasu added. “When your ponzi is aimed at people’s savings (not investment) portfolios, there’s a special place in hell reserved for you.”
In addition to criticism, people try to buy the fallbecause they believe there will be a strong comeback. However, in doing so, many crypto traders fail because of price volatility. In addition, cryptocurrency Twitter (CT) authorities delete tweetsthat discuss UST and LUNA in a positive light. Moreover, cryptocurrency liquidity provider Genesis explained that the company “has no direct exposure to UST and LUNA.” Individuals also claimed that the LUNA and UST drop was a “coordinated attack.” “Market manipulation at its best,” one person wrote on Twitter
Other Terra supporters observed the bots on Twitter and saidthat they are certain that Terra’s problems were the result of a blatant attack. There have been strange instances of bots or Twitter accounts repeating the same statement, which can be found here, here, here, here, and here Although LUNA and UST have not yet fallen to zero, people are either betting that they will, or they believe Do Kwon and believe a massive reversal is coming. By 10:45 a.m. (Eastern Time) UST was trading at $0.504 per unit.
Sator CEO says Luna Foundation and Do Kwon may still hold bitcoin reserves
Isla Perfito, CEO of Sator, a community-focused Web3 content engagement platform, said there may be a possibility that Luna Foundation Guard (LFG) is still holding bitcoin.”People assume that LFG has already sold its BTC,” Perfito said in a statement to Bitcoin.com News. “That’s why UST is setting the price at .40 per dollar. In case they have BTC, their support would be better. Do Kwon should provide a snapshot of their BTCbalance. , to save UST. The CPI reading came out higher than expected today.” Sator’s CEO added:
In my opinion, inflation has peaked. Investors are now waiting for the stock market to bottom out. With UST 1 LUNA could be exchanged for 1 UST and vice versa. That’s why we saw the Luna collapse – when they decided not to keep the peg, they sold the Luna coins. Given that, chances are they have reserves to keep the UST.
Alex Tapscott, managing director of the digital assets group at Ninepoint Partners, explained to Bitcoin.com News on Wednesday that Terra’s problem looks like a hedge fund explosion. “It’s not like what happens when a large hedge fund ‘explodes’ and has to wind down its positions,” Tapscott explained in an email. “It becomes price-competitive, with the assets it owns suffering as a result (albeit often temporarily).” Tapscott continued:
In the long run, the thesis of bitcoin and cryptocurrencies remains unchanged. Bitcoin is the first digital money for the Internet, and crypto-assets in general represent the second era of the Internet, the Internet of Value, which will continue to transform and redefine many industries.
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