We’ve been telling you about it and now it’s here: Luna crashed due to its link to terraUSD (UST), a stablecoin that was pegged to the US dollar.
But that’s not the whole story: The BIGGEST Debate Raging On in Crypto Twitter is whether or not Luna and UST are massive Ponzis that may crash one day and take down a huge part of the crypto world with it.
We’ve shared the below video on how that is bound to happen.
The cryptocurrency Terra (Luna) has collapsed by more than 99 percent. The coin’s value tumbled dramatically on Wednesday, falling from around $6.75 to just over $1. It fell further on Thursday and is valued at just $0.02 as of Thursday afternoon, 12 May 2010.
On the other hand, Terra’s UST stablecoin fell as Low as 65 Cents before rebounding: what went wrong? Particularly, why did the stablecoin lose its peg, which is the US Dollar? And can LUNA recover?
But whichever way it goes from here in the short term, history suggests that it will not be down forever. Similar to the death of Bitcoin – which has already been pronounced by the media more than 400 times – we can expect a recovery on the horizon, but not too soon.
There’s a more succinct explanation revealed by The Independent.
Cryptocurrencies are increasingly moving in sync with tech stocks, with investors treating both as risk assets and often retreating to safer corners of the market during bouts of market volatility.
Michael Kamerman, CEO, trading platform Killing
What is Terra (LUNA)?
Terra is a crypto payment solution that has gained a lot of traction since its initiation in January 2018 by Daniel Shin and Do Kwon, the men behind Terraform Labs.
The platform was built to keep in mind the price volatility of blockchain-based assets and perceive them. Terra focuses on price stability and usability and uses smart contract-enabled cryptographic versions of fiat currencies, called stablecoins, in its platform.
Terra has rolled out multiple fiats pegged stablecoins, including TerraUSD (UST), TerraCNY, TerraKRW, TerraEUR, and other digital currencies. The platform offers easy and quick transactions across borders without any hassle and is used by retailers worldwide.
The native token of the network, LUNA, is an essential element in the Terra Ecosystem and is responsible for the platform’s governance. The LUNA token is responsible for operating the collateralizing mechanisms which keep the stablecoins in check and avoid massive fluctuation.
LUNA uses the Proof-of-Stake consensus and has an elastic supply depending on the platform’s need for stablecoins in circulation. Terra has its wallet, called the Terra Station, that can give direct access to stablecoins. One can access the DApps built on the Terra blockchain by using the wallet. Furthermore, the Terra Station can operate on a phone and a computer without failure.
|Coin||Symbol||Price||Marketcap||Change||Last 24h||Supply||Volume (24h)|
||LUNA||$ 0.019969||$ 651.74 M||98.69%||33.96 B||$ 8.09 B|
Terra Price History
The LUNA coin has performed incredibly well in the year 2021. While the all-time high LUNA price rests at 54.77 USD as of Nov 27, the token started the year at $0.6. The token is ranked 14 on the market with an average trading price of $43 after the recent market crash.
The LUNA price crossed $1 in January and later reached a peak of $6.4 in February. As the investors got the ‘buy Terra’ signal, the prices ran higher for the token. By March-end, the token rallied to $21 and made a new all-time high.
However, this ATH was followed by a bearish movement, due to which the prices of the token dropped as low as 4.1 USD during May while other altcoins were nearing their peak.
Terra Network price current price and bullish trend byCoinMarketCap
As seen in the chart above, the token rallied to a new ATH towards the end of July. By September-mid, the token witnessed a new all-time high above $30. This bullish momentum continued as the token rose by 23% in September and 10% in October.
Terra Technical Analysis
Over a previous couple of weeks, LUNA has witnessed significant improvements. However, LUNA has been trading negatively for a few days.
The chart shows that the consolidation phase might very well conclude in a bull-flag formation, which is a traditional bullish continuation pattern.
Waiting for a fresh higher high would be the safest strategy to trade this pattern. The current all-time high, about $104, would be the target. We can yet dip more, waiting for the price to break out and validate the positive trend.
Response to James: The three-digit Luna prices seem attainable, but the model and assumptions do not look right to me:
1) It implicitly assumes the UST market cap increases by burning Luna. That’s not true. UST market cap expansion comes mainly from the appreciation of Luna and secondly from minting new Luna. Test it: You can quickly validate it by plotting the UST market cap against Luna in circulation and the Luna price.
2) It assumes a money printing mechanism – Bitcoin and Luna prices can spiral up by buying into these two asset pools. But the whole point of Bitcoin is to hedge against money printing. I think we need to be skeptical about a model that spirals itself up. Testing it: replace the Bitcoin price with an upward trend with stochastic fluctuations.
Check if the terminal value still holds and whether LUNA prices during high BTC movements are sensible. I think the projection doesn’t work well in the period to period movement, nor would it generate consistent terminal values. And conceptually, Bitcoin backing should reduce luna minting and burn, stabilizing the Luna price. Price will still likely appreciate due to adoption, but volatile movement (such as 1000x) is probably contradictory to this strategy.
3) It assumes a fractional reserve stablecoin will overthrow established fully backed stablecoins. But I think fully reserved stablecoins will still dominate. I think the $80k model result was driven mainly by the issues above.
A side note:
Never heard of it before today (probably says it all? lol), but the stable coins for the $WAVES eco de-pegged. Thoughts? A lot of haters want to see the same fate for UST.
A dear friend’s advice: If you have crypto, don’t flaunt it or keep it in your wallet — spend it!
The beginning of the end: Terra (LFG) buys over 2500 Bitcoin worth $100 MILLION? Read more here.
Everything needed is found on the charts, plan your trades, figure out where to enter the markets, place your stop-loss, and take profit orders with advanced and free technical analysis/signals. The charts have been explicitly developed for traders to study technical analysis and offer a large selection of free indicators and price feeds. So it baffles those on the fringes to see most traders lose.
Here’s why: nothing is one hundred percent predictable from the start. What looks like a sweet thing can suddenly turn sour, as we’ve found out. Cryptos are good to go when you have the mettle to withstand volatility and can opt to stake until the sky is clear to trade. High risk and high reward investments abound, but rarely on the level of top-selling altcoins—unregulated virtual currencies that are turning into one of the most volatile investment instruments available today.
FAQs on Terra (LUNA)