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Why Did Terra (LUNA) Crash?

Updated: Jun 22

In today's article, we will talk about the unfortunate crash of the Terra Luna Coin. But before we start don't forget to subscribe to our newsletter and follow us on Instagram.


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Now that I have your attention. Let's begin with the story without wasting any time.


THE STORY

Over the last few weeks, Terra Luna Coin has lost over 99% of its value falling from $6.75 on Wednesday to less than $0.02 on Thursday. Its market cap fell from around $40 billion to around $200 million. Major crypto exchanges like Binance also suspended Terra withdrawals. Coinbase sited:-

"trend of both lower crypto asset prices and volatility began in late 2021, but we donot expect these conditions to be permanent"

According to many experts, It fell because of its link to TerraUSD which is a stablecoin

pegged to the US dollar. Terra USD de-pegged itself from USD this week. This caused immense panic among investors as they started panic selling the coin.


The shares of Coinbase (one of the largest crypto exchanges) fell by around 15.6% overnight.


Yeah, the situation is pretty bad for the crypto exchange at large. However, there is still some hope left. Institutional Investors are expecting the market to normalize and recover soon. I would like to end with a note by Simon Peters, a major crypto analyst said:-

"The market is caught in the wider adversity of investment markets that are battling to decide whether comfortable levels are in the wake of intrest rate hikes designed to quell soaring inflation around the Western world"


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