During the last few days, the crypto economy has been tumultuous as billions have fled the market in search of safety. The issues with LUNA sparked a significant sell-off as Terra’s native digital asset dropped 97% in value against the U.S. dollar in 24 hours. Terrausd has slipped 67% lower than the $1 parity and was trading at a low of $0.299 per unit at 9:00 a.m. (ET).
Terra Native Token LUNA Loses 97%, While UST Loses 67% in 24 Hours
The Terra blockchain ecosystem has been devastated by the events of the past few days, when the network’s algorithmic stablecoin terrausd (UST) began to lose its peg to the US dollar. Project founder Do Kwon and the Luna Foundation Guard (LFG) also explained that the team is lending $1.5 billion in bitcoin (BTC) and terrausd (UST) to help defend the ankle. The effort was unsuccessful and the UST slipped to $0.66 per coin, but then for most of Tuesday the UST managed to rally back above the 0.90 region. $.
On Tuesday evening, UST started to plummet again and it has continued to slide to its most recent lows at $0.299 per unit. The native token LUNA suffered even more than UST, as it has lost 97% in value during the past 24 hours. LUNA has had a 24-hour price range between $33.93 per unit and $0.810 per coin. Furthermore, after Do Kwon said to stay strong and a plan was on the way, the Terra co-founder addressed the public on Twitter.
“Before anything else, the only way forward will be to absorb the stablecoin supply that wants out before the UST can start repeg,” Kwon said. “There is no getting around this. We are proposing several fixes to help the peg mechanism absorb supply. million to 100 million SDRs*) Decrease PoolRecoveryBlock from 36 to 18 This will increase minting capacity from $293 million to ~$1200 million,” the Terra co-founder added.
Kwon also said that Terra could rebound from the collapse and noted that the project was not going anywhere. “Terra’s return to form will be a sight to behold,” Kwon tweeted. The Terra founder added:
We are here to stay. And we will continue to make noise.
‘Worse Than Bitconnect’
Of course, under the circumstances of many individuals losing money and some of them losing everything, many people criticized the response from the Terra founder. The podcast host Peter McCormack asked Kwon “What % chance to you give it that the same won’t happen again?” Bitcoin supporter Hasu said the UST event was “worse than Bitconnect.” “At least Bitconnect didn’t masquerade as a stablecoin,” Hasu added. “When your ponzi targets people’s savings (not investment) portfolio, there is a special place in hell reserved for you.”
In addition to criticism, people have been try to buy the dip because they believe a comeback will happen. However, in doing so, many crypto traders are destroyed by price volatility. Additionally, crypto Twitter (CT) influencers are deleting tweets that discuss UST and LUNA in a positive light. Additionally, the crypto liquidity provided to Genesis Explain that the company has “no direct exposure to UST and LUNA”. Individuals also claim that the fall of LUNA and the UST was a “coordinated attack”. “Market manipulation at its best”, an individual tweeted.
Other Terra supporters have been watching bots on Twitter and have stated they are certain Terra’s issues were the result of a blatant attack. There have been odd sightings of bots or Twitter accounts repeating the same statement, which can be found here, here, here, here, and here. While LUNA and UST have not yet plummeted to zero, people are either betting that they will or they believe Do Kwon and think a massive reversal is in the cards. By 10:45 a.m. (ET), UST was trading for $0.504 per unit.
Sator CEO Says Luna Foundation and Do Kwon Can Still Hold Bitcoin Reserves
Isla Perfito, CEO of Sator, a Web3-first content engagement platform for the community, said there might be a chance that the Luna Foundation Guard (LFG) still holds bitcoin. “People assume that LFG has already sold their BTC,” Perfito told Bitcoin.com News in a statement. “That’s why UST offers a price of 0.40 per dollar. If they have BTC, their support is better. Do Kwon should provide a snapshot of his BTC balance to save UST. CPI numbers are higher than expected today. The Sator CEO added:
In my opinion, inflation has peaked. Investors are now waiting for the stock market to bottom. With UST, 1 LUNA could be exchanged for 1 UST and vice versa. This is why we observed the Luna crash — when they decided to not keep the peg, they were selling Luna coins. With that said, there’s a chance that they have reserves to save UST.
Alex Tapscott, Managing Director of the Digital Assets Group at Ninepoint Partners, explained to Bitcoin.com News on Wednesday that Terra’s problem is similar to a hedge fund blowing up. “It’s not unlike what happens when a large hedge fund ‘blows up’ and is forced to unwind its positions,” Tapscott explained in an email. “He becomes a price taker, causing his own assets to suffer (though often just temporarily).” Tapscott continued:
Long term the thesis on Bitcoin and crypto remains intact. Bitcoin is the first digitally native money for the internet and crypto assets as a whole represent a 2nd era of the internet – an internet of value- that will continue to transform and rethink many industries.
