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

189
SHARES
1.5k
VIEWS


Crypto investors never thought they would have to ask whether TeraUSD (UST) or Luna would reach $1 first. On Wednesday, the question became the buzzword of the cryptosphere as the Terra ecosystem exploded.

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

READ ALSO

Amidst the chaos, Cointelegraph analysts Sam Bourgie, Jordan Finneth, Marcel Pechman and Benton Yuan held an emergency edition of “The Market Report”, which usually airs on Tuesdays, to discuss exactly what Happened.

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

Finneath breaks down the market psychology of the downtrend and why investors can expect more pain in the coming months. Meanwhile, Yuan discussed some possible theories as to who might be responsible for organizing the BTC dump that caused panic inside Terra’s ecosystem.

related: Celsius Network refutes rumors of significant losses amid market volatility

Staying true to form, Pechman placed the LUNA crash in 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. Make sure to hit those like and subscribe buttons for all our future videos and updates.

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