• Terra Luna (LUNA) has been struggling to keep above the $2.0 price mark for the past week.
• The collapse of FTX impacted LUNA’s market capitalization which fell from $285 million to $160 million last year.
• The stablecoin project aimed at complementing the price stability and wide adoption of fiat currencies with the decentralized model of cryptocurrency collapsed in May 2022, leading to a global crash in the market.
Terra Luna (LUNA) is a cryptocurrency that has been struggling to maintain its value over $2.0 for the past week and even fell below this level within this period. Its market cap at press time stood at $464,133,700 but there is still relative improvement over its previous warning. A stablecoin system was created to protect investors from extreme price volatility but it failed when LUNA’s prices got destabilized, leading to a global cryptocurrency crisis thereafter.
Stablecoins were created to protect investors from extreme price volatility of popular cryptocurrencies like Bitcoin by being pegged either with fiat currency or supporting cryptocurrencies like Luna. But when Luna’s prices got destabilized due to large investors selling their tokens, it had an adverse effect on UST prices too and eventually led to complete collapse of the stablecoin system in May 2022 causing a huge drop in price of coins and loss of around $45 billion globally in just one week.
Terra System Collapse:
The leadership of Terra system tried implementing a plan where they would buy Bitcoin reserves so as to buy more UST and LUNA coins and stabilize their prices, however, this plan didn’t work out, thus leading thousands of investors across the globe lose money in this process.
LUNA was once among the top 10 cryptocurrencies by market value towards the end of 2021 before its apocalyptic collapse in early May 2022 sent shockwaves throughout crypto-markets wiping out almost all gains made prior that year resulting from bull runs seen elsewhere across other altcoins during that period .
As much as we’d like LUNA return back to its former heights it is unlikely as it will never be considered safe enough for investment due its unstable nature caused by unpredictable external factors such as these which can cause serious losses if not taken into account while investing in any digital asset class including cryptocurrencies .