Life has its own ups and downs and so does the crypto market but as you continue to live in life despite its ups and downs, you must continue to trade!
Last week has been another roller coaster ride for the crypto market, creating a panic amongst investors as it witnessed a fall of one of its popular coins Terra LUNA, which is now delisted on most of the popular trading platforms. Last month, the coin touched a high of $119.18. However, it witnessed a fall in its value since the beginning of May 2021.
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Not only the fall of the so-called stable coin Terra LUNA has created a situation of panic amongst the traders, but also have raised relevant concerns relating to cryptocurrency. The token value of Luna fell dramatically from $80 to below $0.002 in 48 hours.
Crypto experts suggest that one of the major factors for the crash of Luna’s value is ‘Whale dumping of tokens’. Whale dumping of tokens refers to traders who are foreign institutional investors that purchase and sell a certain currency in bulk. Dumping of the Luna coin by Whales caused a situation of panic amongst ordinary investors and also raises a question on the ability of blockchain technology to handle such swings in the market sentiment. Experts pointed out that while algorithmic stabilization of stablecoins cannot be ruled out, the technology must be made resilient in situations like these. Other industry experts believe the crash unfolded because demand for these stablecoins soared. As a result, the algorithm issued more and more Luna coins in an attempt to recorrect. However, it went into overdrive, causing significant issues. The entire supply of Luna increased from around 725 million tokens on May 5th to approximately 7 trillion on May 13th, resulting in trillions more Luna tokens than previously existed, and the more of anything there is, the less valuable a single one becomes.
It is to be noted that these are speculations and opinions of crypto experts and not the final word as to why the crash took place.
With the fall of Terra LUNA, one of the significant questions that arises is- Whether Terra LUNA will revive?
Well, the Terraform Labs founder and CEO Do Kwon is showing some hope to investors through the announcement of a revival plan that he made on his Twitter account. Experts suggest that the only way for Luna’s value to recover to anywhere close to its former price, would be to burn large amounts of the supply which is now 6.5 trillion coins, to bring it back down to pre-crash levels. Do Kwon stated that this is part of their recovery strategy and announced the coin’s resurrection as “Terra 2.0”. Do Kwon’s whole revitalization plan paper as shared by Do Kwon on his Twitter account may be seen here, https://agora.terra.money/t/terra-ecosystem-revival-plan-2-amended/18498 .
Though the revival plan looks to be a long-term aim, the crisis represented the epitome of hyperinflation in crypto currencies, and whether it will be revived or not would mark another key event in the history of crypto currencies.The LUNA crisis emphasized the reality that cryptocurrency is a very volatile asset, and investors must trade with prudence and a long-term perspective to stay profitable.
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