Home Cryptocurrency Why did Terra LUNA and UST crash?

Why did Terra LUNA and UST crash?

by Gordon James

After the sudden collapse of Terra LUNA and UT, many investors are left wondering what went wrong. In this blog post I will explore different potential explanations for their failure with a focus on whether or not they were legitimate projects in the first place.

The “why is luna crypto crashing” is a question that many people are wondering. The crash of the cryptocurrency has been attributed to a number of factors, including the high level of demand and the lack of liquidity.

Why did Terra LUNA and UST crash?

 

Investors in cryptocurrencies never expected to have to decide whether TerraUSD (UST) or LUNA would hit $1 first. As the Terra ecosystem crumbled on May 11, that question became the buzz of the cryptosphere. 

Terraform Labs co-founder Do Kwon came to Twitter to offer his rescue plan after algorithmic stablecoin UST lost its dollar peg, plunging to a low of approximately 30 cents. According to CoinMarketCap, the value of sibling cryptocurrency LUNA, which was formerly a top-ten crypto project by market capitalization, plummeted by almost 98 percent to 84 cents. In early April, LUNA was trading for more over $120.

In the midst of the commotion, Cointelegraph experts Sam Bourgi, Jordan Finneseth, Marcel Pechman, and Benton Yuan hosted an emergency episode of The Market Report, which usually airs on Tuesday, to talk about what happened.

Before discussing how UST lost its peg, Bourgi outlined the theoretical basis of algorithmic stablecoins and why they’re intrinsically hazardous. Remember how excited everyone was when Luna Foundation Guard bought Bitcoin (BTC)? According to Bourgi, this was one of the biggest red flags.

Finneseth explained how market collapses affect market psychology and why investors can anticipate more suffering in the months ahead. Meanwhile, Yuan highlighted some possible speculations as to who could have orchestrated the BTC dump that sparked fear across Terra’s ecosystem.

In the midst of market turmoil, Celsius Network executives dismiss allegations of large losses.

Pechman, true to style, placed the LUNA fall in the context of the global financial system, concluding that crypto and Bitcoin remain the greatest investments.

The complete replay is available on Cointelegraph’s YouTube channel. For all future videos and updates, make sure to hit those like and subscribe buttons.

The analysts’ views, ideas, and opinions stated here and during the broadcast are their own and do not necessarily reflect or represent Cointelegraph’s.

The “will cryptocurrency crash” is a question that has been asked for a long time. Many people are worried about the future of cryptocurrencies, but there are many reasons that may have caused Terra LUNA and UST to crash.

Related Tags

  • terra (luna risks)
  • will luna terra recover
  • terra (luna crypto)
  • future of cryptocurrency 2021

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