What’s The Reason Behind Terra Luna’s Crash: Read To Know

The current week is not proved suitable for the cryptocurrency market because it is confronting unusual crashes. The value of Bitcoin, also called BTC, resisted at $28,031.48 at the time of writing this article. And this Bitcoin price is taken into account as lower than the benchmark of $30,000.

Apart from Bitcoin, Ethereum, also known as ETH, is also encountering an unpleasant week. The current value of Ethereum is $1,937.85 on international exchange.

However, when it comes to the greatest loser of all cryptos, it is Terra Luna, also called LUNA. According to the data by CoinMarketCap, it has been dropped over 85 percent on May 11. As per experts, the reason behind  Terra Luna’s crash is the ‘de-pegging’ of TerranUSD (UST) stablecoin.

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How much did Terra Luna’s price decline? 

According to the data issued by CoinDesk, the value of Terra Luna stood at $0.37. The cryptocurrency experienced a decline of 55 percent on May 10. Apart from that, it saw a further 85 percent price drop on Wednesday. LUNA investors were knocked out of 95 percent of their money in the previous few days.

However, for the time being, the value of LUNA is approximately 97 percent which is lower than its all-time peak of $118, as it stands in April.

What’s the reason behind Terra Luna crashing?

As a stablecoin, the Terra ecosystem has selected UST, which leads to the interconnecting of UST and LUNA. A stablecoin is connected to a fundamental asset like valuable metal, including gold or the US dollar.

And when we talk about UST, in recent times, it has ‘de-pegged’ to $0.45 from its price of $1. This labeled a decline of approximately 55 percent. In view of the fact that both UST and LUNA are interconnected, the considerable reduction in UST price has caused LUNA’s overall decline.

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The current market cap of Terra Luna now stands at under $ billion, $994.17 million at the time of writing this article, according to CoinDesk. Moreover, this is contrasted sharply with its record high market cap of approximately $25 billion.

We suggest that investors wait for the market to stabilize for the time being, which would help recover from the losses increasingly.

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