LUNA Crash, will luna come back up, what you must know

Can crash, will luna rise again Empiregist understand that this is the question investors has been asking since the Terra token fell from all time high of $119 (£96), last month, April 5th 2022 , to $0.0002 on Friday 13th May 2022.

Investors in the cryptocurrency Terra (LUNA) are panicking after the currency’s value dropped by more than 98% in a 24-hour period.

Terra, which was once among the top ten most valuable cryptocurrencies, fell below $1 (£0.82) on Wednesday after peaking at $120 (£98.60) last month.

The sudden meltdown saw its market cap plummet from almost $40 billion (£32.9 billion) to only $220 million as at the time of reporting, triggering catastrophic losses.

Can recover, will luna rise again – Why did Luna crash?

crashed due to its link to terraUSD (UST), a stablecoin which was pegged to the US dollar.

Stablecoins are cryptocurrencies linked to traditional ones.

UST decoupled from the dollar earlier this week, which sent its price tumbling through the floor.

The coin’s collapse comes amid a general downturn for cryptocurrency, with many coins losing a quarter of their value in the past 24 hours.

Investors appear to be moving away from cryptocurrency and towards less risky investments in the face of global inflation.

Shares in Coinbase, the largest crypto exchange in the US, dropped 15.6 per cent overnight on Tuesday after it posted net losses of $430m (£348m), far worse than analysts were expecting.

Coinbase cited a “trend of both lower crypto asset prices and volatility that began in late 2021”, but was quick to point out that it does not expect these conditions to be “permanent”.

The news has raised questions about whether the market has reached an expected cooling-off period – previously dubbed a “crypto winter” – or a more permanent chill, perhaps a “crypto ice age”.

Simon Peters, crypto market analyst at trading platform eToro, said: “The concern now for cryptoasset investors is when the slide will end.

“The market is caught in the wider adversity of investment markets that are battling to decide where confortable levels are in the wake of interest rate hikes designed to quell soaring inflation around the Western world.”

Can recover, will luna rise again? – So why has it so dramatically dropped in value, and will it ever bounce back?

ALSO READ:- Bitcoin Crash Again In Crypto Market

 

Will recover?

The coin has the potential to recover, but at present things are extremely uncertain.

Do Kwon, founder of Terra creator Terraform Labs, tweeted on Tuesday: “Close to announcing a recovery plan for $UST. Hang tight.”

He added on Wednesday: “I understand the last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.

“The Terra ecosystem is one of the most vibrant in the crypto industry, with hundreds of passionate teams building category defining applications within… Terra’s return to form will be a sight to behold.”

Investing advice site Investing Cube has speculated there is a “good chance” the cryptocurrency could recover.

Analyst Kelvin Maina wrote: “For to recover, they will need to address the problem and show clearly that such a drop will not happen again. As an analyst, I expect to see a bump in Luna prices after UST is pegged back to the dollar. I also expect the prices to start recovering after the Terra project shows that similar problems will not happen in the future.”

Similarly, Market experts are still bullish on the future of and expect the token to recover in future. However, they believe that it may take some time to repeg UST and the pain might last longer.

Shivam Thakral, of BuyUcoin, said the recent LUNA crash has revealed some major loopholes in the algorithm-backed stablecoins and the industry needs to act responsibly by addressing the concerns of the investors publicly.

“LUNA will take some time to recover from this shock and it will be a good idea to shift UST from algo to fiat-backed,” he added with hopes that the token will recover gradually.

Market participants believe that to stabilize this ecosystem, UST needs to move towards its $1 peg from its current $0.55 trade value, whereas LUNA will be distributed in this process and thus, LUNA’s unit value will likely remain modest.

The majority of the industry experts suggested that investors should not go all blazing in LUNA before it stabilizes after the carnage. One should avoid bottom fishing and hunt short term gains. Invest according to their risk appetite, they advise.

UST is likely to recover, LUNA will have to ride out for the longer term to regain its strength, said Subbaraj from Giottus. “However, increased supply will cap its gains. We don’t recommend investors to buy LUNA before UST re-pegs.”

Edul Patel from Mudrex suggested not to jump into any impulsive buying activity now, whereas Thukral from BuyUCoin said that investors should stick to the fundamentals of investing and invest as per their risk appetite.

Members of Luna’s devoted subreddit have been lamenting their losses on Reddit. A subreddit is a subsidiary thread or category within the Reddit website.

“I lost over $450,000, I cannot pay the bank,” one wrote, while others have mentioned potentially losing their homes.

How risky is cryptocurrency?

People invest at their own risk and cryptocurrencies are not regulated by British financial authorities.

All crypto investments are risky, but meme coins like Shiba Inu are particularly volatile, and you should be prepared to lose everything you invest.

The Financial Conduct Authority (FCA) warned in January: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.

“If consumers invest in these types of product, they should be prepared to lose all their money.”

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown previously explained the risks involved.

She said: “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud.”

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