terra price today: ‘Depegged’ TerraUSD butchered LUNA; Terra plunged 97% in a month

Synopsis

The token, which dropped 55 per cent on Tuesday, eroded another 85 per cent on Wednesday. In the last couple of days, it has wiped out about 95 per cent of investors’ wealth.

On Wednesday, the toke hit an intraday low of $4.21, whereas on Monday it was trading around $66. Interestingly, the token is 97 per cent below its all-time peak of $118, scaled just a month ago.New Delhi: It is a massacre of Terra investors who were slaughtered within 48 hours as its native token LUNA hit the lowest level in a year.

The token, which dropped 55 per cent on Tuesday, eroded another 85 per cent on Wednesday. In the last couple of days, it has wiped out about 95 per cent of investors’ wealth.

On Wednesday, the toke hit an intraday low of $4.21, whereas on Monday it was trading around $66. Interestingly, the token is 97 per cent below its all-time peak of $118, scaled just a month ago.
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Its sister concern and the stablecoin from the foundation TerraUSD (UST) has again ‘depegged’ from its value of $1 to below $0.45, dropping about 55 per cent. This is the key reason hurting the sentiment for Terra (LUNA).

The total market cap of Terra dropped below $2.75 billion, making it the 34th largest cryptocurrency. During its golden days, it was the eighth largest crypto token with a market cap of about $25 billion.

Jennifer Lu, Cofounder at Coinstore, said that the recent incident of UST losing its dollar peg has sent shockwaves across the crypto market as it has exposed the weakness of algorithm backed stable coins.

Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. It combines the price stability and wide adoption of fiat currencies with Bitcoin and offers fast and affordable settlements.

Its stablecoin, TerraUSD (UST), lost its dollar peg for the third consecutive day. As UST ‘depegged’ the price of LUNA, its sister token, has taken a big hit.

“UST may be difficult to retain its peg during moments of severe volatility or flash market collapses”, said WazirX Trade Desk. “LUNA’s tokenomics are fundamentally sound in a perfect world where market forces operate as they should.”

The Terra network wants to buy $10 billion in Bitcoin as a UST reserve to keep the stablecoin’s value steady, the only reason for backing UST with Bitcoin.

Luna foundation moved 42,500 Bitcoin’s, which were sent to a crypto exchange, OKX just to maintain its peg, WazirX told ETMarkets in its note.

Although the founder of Luna Foundation, Do Kwon, has been reassuring people and recently tweeted about how they will bring the peg back. Luna and all its DApps, like Anchor Protocol, have taken a massive hit.

While reading the technical charts of Terra, BuyUcoin cryptocurrency exchange said that the recent UST crisis revealed major loopholes in the algorithm-backed stablecoin system, which will need to be addressed publicly to gain back the confidence of the investors.

“The recovery of LUNA will depend on the corrective measures taken by the parent network/LGF, which has built a large Bitcoin reserve with a series of large-scale Bitcoin acquisitions,” he added.

LUNAETMarkets.com
Other market participants said that such projects are experimental and could be volatile and risky enough to burn the hands of all the users associated with them. They warned investors about the unstable algorithms of such stablecoin projects.

Algorithmic stable coins are still at evolution the stage and currently they are mere experiments, said Anshul Dhir, COO & Co-founder, EasyFi Network said.

“Different projects are trying to experiment with one same category- Stablecoins.”

There is an intrinsic risk associated with it and anyone who is investing should not blame the project founders or the industry itself because of the very innate risk of these kinds of projects that needs to be understood earlier, he said.

Not only Terra, other major crypto tokens, including Bitcoin and Ethereum, dropped 4 per cent each. Other altcoins such as BNB, Solana, Cardano, XRP and Dogecoin, Shiba Inu plunged up to 10 per cent.

According to the morning note from CoinDCX Research Team, a combination of weak macroeconomic sentiment alongside the collapse of Terra (LUNA) were the primary drivers behind the latest weak movements in the crypto markets.

Note: Image and Datasource: Coinmarketcap.com
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Updated: 05/11/2022 — 14:00

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