Thursday 19 May 2022
Home / 21 Shares / Why did Terra LUNA and UST crash? | Find out on The Market Report

Why did Terra LUNA and UST crash? | Find out on The Market Report

Cryptocurrency investors never thought they’d have to ask whether TerraUSD (UST) or LUNA would reach $1 first. On Wednesday, that question became the talk of the cryptosphere as the Terra ecosystem imploded.

As the algorithmic stablecoin UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to Twitter to share his rescue plan. At the same time, the value of sister token LUNA, once a top-10 crypto project by market capitalization, plunged over 98% to $0.84, according to CoinMarketCap. For reference: LUNA was trading north of $120 in early April.

Amid the chaos, Cointelegraph analysts Sam Bourgi, Jordan Finneseth, Marcel Pechman and Benton Yuan held an emergency edition of “The Market Report,” which normally airs on Tuesdays, to discuss what exactly went down.

Bourgi explained the theoretical underpinnings of algorithmic stablecoins and why they’re inherently risky before dissecting how UST lost its peg. Remember all that excitement surrounding Luna Foundation Guard’s Bitcoin (BTC) purchases? That was one of the biggest red flags, Bourgi said.

Finneseth broke down the market psychology of market crashes and why investors can expect more pain in the months ahead. Yuan, meanwhile, discussed some potential theories as to who may have been responsible for orchestrating the BTC dump that triggered the panic inside Terra’s ecosystem.

Related: Celsius Network execs deny rumors of significant losses amid market volatility

Staying true to form, Pechman put the LUNA crash within the context of the global financial system, concluding that crypto and Bitcoin are still the best assets to hold.

You can watch the full replay on Cointelegraph’s YouTube page. Be sure to smash those like and subscribe buttons for all our future videos and updates.

The views, thoughts and opinions expressed here and during the show are the analysts’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

About Sean Patterson

Check Also

Bitcoin shakes of Fed volatility as analysts remain split on return under $24K

Bitcoin (BTC) circled $30,000 on May 18 after fresh comments from the United States Federal Reserve sparked n volatility. BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewAnalyst: Extra Fed rate hikes "biggest risk"Data from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating within a range in place since May 12. The pair had come unstuck as Fed Chair Jerome Powell delivered economic policy insights during the Wall Street Journal's Future of Everything Festival. "I don't know if financial conditions have tightened more than this in a very long time," he told the paper's chief economics correspondent, Nick Timiraos, in an interview. Powell appeared to confirm that 50-basis-point key interest rate hikes would continue in subsequent meetings of the Fed's Federal Open Markets Committee (FOMC) and could reach "neutral" levels in Q4. Hikes afterward, however, could nonetheless continue if necessary to tame inflation further. With traditional ..

Leave a Reply

Your email address will not be published. Required fields are marked *