Regional
His legacy reminds us of the importance of self-reliance, courage,...
Terra, which was trading at $118 last month and was the seventh-largest crypto-token, had its lowest day on Thursday when it dropped to $0.09.
Digital Desk: The native token of the Terra blockchain, LUNA, has dropped all of its value to become merely a penny token. USD Terra (UST), its 'depegged' and 'unstable' sibling business, has lost 99.9% of its value in just 72 hours.
Terra, which was trading at $118 last month and was the seventh-largest crypto-token, had its lowest day on Thursday when it dropped to $0.09.
Surprisingly, the token's value plummeted from almost $80 to only a few cents in the last 72 hours, indicating that it has seen the most volatility.
Terra Network's algorithm-backed stablecoin, UST, lost its dollar peg, causing LUNA prices to fall. UST and Luna are linked because every UST transferred burns a LUNA and vice versa.
"Investors lost faith in Terra after the de-peg of its linked algorithmic stablecoin UST," said Vikram Subburaj, CEO of Giottus Crypto Exchange.
"The circulating supply of LUNA, which was used to peg UST at $1, lost value as investors dumped the asset swiftly. Its circulating supply increased from 350 million to 2.5 billion in three days to enable UST to recover its peg," he added.
LUNA's market capitalization has dropped to millions, less than $300 million. However, the LUNA token's volume has been quite impressive, with tokens worth $7.75 billion changing hands in the last 24 hours, according to coinmarketcap data.
"The crypto market is already gloomy and it may have put even more pressure on the UST, leading to its asset annihilation," Edul Patel, CEO and Co-founder of Mudrex, said.
Market experts are optimistic about the future of LUNA and believe the coin will recover. However, they feel that repegging UST will take time and the discomfort will endure longer.
According to Shivam Thakral, CEO of BuyUcoin, the recent LUNA meltdown exposed several serious flaws in algorithm-backed stablecoins, and the sector needs to act responsibly by publicly addressing investor concerns.
"LUNA will take some time to recover from this shock, and it will be a good idea to switch UST from algo to fiat-backed," he said, adding that he hopes for a steady recovery of the token.
Market investors feel that UST must grow closer to its $1 peg from its present $0.55 trade value to sustain this ecosystem, but LUNA will be dispersed as part of this process; hence LUNA's unit value will likely remain low.
Most industry professionals advised investors not to go all-in on LUNA until it stabilized following the catastrophe. Bottom fishing and short-term gains should be avoided. They advise people to invest according to their appetite for risk.
UST is expected to recover, while LUNA will have to wait longer to regain its strength, according to Subbaraj of Giottus. "Increased supply, on the other hand, will limit its profits. We do not advise investors to purchase LUNA before the UST re-pegs."
Mudrex's Edul Patel advised investors not to engage in any impulsive buying right now. In contrast, BuyUCoin's Thukral advised investors to stick to the principles of investing and invest according to their risk aversion.
Leave A Comment